microeconomics exam 1

consider the supply curve for cotton shirts. An increase in the price of cotton will:

decrease the supply of cotton shirts

Mark and Rasheed are at the bookstore buying new calculators for the semester. mark is willing to pay $75 and Rasheed is willing to pay $100 for a graphing calculator. the price for a calculator at the bookstore is $65. how much money is their total consumer surplus

$45

tealand is producing at point C on its production possibility frontier. what is the opportunity cost of increasing the production of tea from 20 million cups to 30 million cups?

5 million scones

which of the following is a normative statement?

A camera makes a good wedding gift.

many films compete in providing overnight delivery services. if the market for the overnight delivery services experiences an increase in price, what must have happened?

An increase in demand and a decrease in supply.

if they bake only cakes in a single day George can bake 10 cakes and Greta can bake 5 cakes. if they make only pies in a single day George can bake 10 pies while Greta can bake 4 pies. we know that __ has an absolute advantage and a comparative advantage in making __.

George; Pies

Mario is willing to mow one lawn for $18; he will mow a second for $22 and a third for $28. assume that the market rate for lawn mowing is $24. how many lawns will Mario mow? what will be his total revenue? what will be his producer surplus?

Mario will mow two lawns for a total revenue of $48, and his producer surplus will be $8

assume that we have a PPF. point A lies inside (to the left) of the frontier. point B and C are located along the frontier and point D is located outside (to the right) the frontier. which point represents efficient production points?

Points B and C are efficient

if air travel to Hawaii becomes less expensive, what is most likely to happen in the market for hotel rooms in Hawaii?

The demand curve for hotel rooms will shift to the right.

which of the following could account for the fact that ice cream prices have recently increased and that consumption of ice cream has declined?

The supply of ice cream has decreased

what best describes the competitive market?

There are many buyers and sellers of the same good.

if the opportunity cost of manufacturing machinery is lower in the united states than in Britain and the opportunity cost of manufacturing sweaters is higher in the united states than in Britain then the united states will

import sweaters from Britain and export machinery to Britain

Graciela is willing to sell 1 dozen roses for $50 while Giuseppe is willing to sell 1 dozen roses for $60. Carlos is wiling to buy 1 dozen roses for $60 while Yuriko is willing to pay $50. if the market price is $52, how many roses are sold and what is the sum total of consumer and producer surplus after the transactions?

one dozen roses will be sold and the total consumer and producer surplus will be $10

those points lying beyond the production possibilities frontier

represent outcomes unattainable with the current level of technology and resources

increases in resources or improvements in technology will tend to cause a society's production possibility frontier to

shift outward

suppose that in Australia, it takes 2 hours of labor to harvest 10 bushels of apples and 4 hours of labor to harvest 10 bushels of tomatoes. further, suppose that a worker in Brazil can harvest 10 bushels of apples in 4 hours or 10 bushels of tomatoes in 5 hours. which of the following statements are true?

Of these two countries, Brazil has a comparative advantage in producing tomatoes.

an increase in the price of hamburger would probably result in __ in the demand for hamburger buns.

a decrease

if the demand curve for ice cream is downward sloping and the supply of it decreases, there is __ in consumer surplus

a decrease

economist generally agree that people are most likely to change their behavior when they

are given incentives to do so

(Figure: Production Possibility Frontier for Tealand) look at the figure Production Possibility Frontier for Tealand. if tealand is producing 10 million scones and 10 million cups of tea (point A) we know that the economy

is using its resources inefficiently

if a country specializes according to its own comparative advantage and then trades with other nations

it can consume at a higher level than the domestic production possibilities frontier.

if both gasoline and jet fuel prices increase significantly due to war in the Middle East . the impact on Federal Express will be a

leftward shift in the Federal Express supply curve

suppose the market for gasoline is in equilibrium. you have heard that the price of crude oil is falling because of new oil discoveries. you are also aware that the number of car and truck drivers is steadily rising. knowing this, you predict that the price of gasoline will __ and the quantity of gasoline bought and sold will __.

rise or fall; rise

economist typically depict the production possibilities frontier as a bowed out curve rather than as a straight line in order to show that

the opportunity cost of producing a good rises as more is produced

most individuals choose careers in which they specialize in producing only one type of good or service, yet as consumers they have access to a wide variety of goods and services. what principle allows for this?

trade

scarcity in economics means that

we do not have sufficient resources to produce all of the goods and services we want