MidTerm 1 Practice Exam ECO2023

REFER TO FIGURE 9 : What is the value of the portion of producer surplus transferred to consumers as a result of the rent ceiling?

$100,000

What is the value of the deadweight loss after the imposition of the ceiling?

$100,000

REFER TO TABLE 1 : The equations above describe the demand and supply for Bubba's Fried Jellybeans. The equilibrium price and quantity for Bubba's Fried Jellybeans are $40 and 5 thousand units. What is the value of producer surplus?

$12.5 thousand

REFER TO TABLE 1 : The equations above describe the demand and supply for Bubba's Fried Jellybeans. The equilibrium price and quantity for Bubba's Fried Jellybeans are $40 and 5 thousand units. What is the value of consumer surplus?

$25 thousand

REFER TO TABLE 1 : The equations above describe the demand and supply for Bubba's Fried Jellybeans. The equilibrium price and quantity for Bubba's Fried Jellybeans are $40 and 5 thousand units. What is the value of economic surplus in this market?

$37.5 thousand

REFER TO TABLE 1 : The equations above describe the demand and supply for Bubba's Fried Jellybeans. What are the equilibrium price and quantity (in thousands) for Bubba's Fried Jellybeans?

$40 and 5 thousand

REFER TO FIGURE 5: Calculate the area of the trapezoid X.

$810

REFER TO FIGURE 3 : What is the opportunity cost of producing one gallon of milk in Tahiti?

1.2 gallons of honey

REFER TO FIGURE 3: What is the opportunity cost of producing one gallon of honey in Bora Bora?

2/3 of a gallon of milk

Which of the following is a positive economic statement?

If the price of beef falls, a larger quantity of it will be bought.

One would speak of a change in the quantity of a good supplied, rather than a change in supply, if

The price of the good changes.

What is the "omitted variable" problem in determining cause and effect?

It is a problem that arises when an economic variable that affects other variables is omitted from an analysis and its omission leads to false conclusions about cause and effect.

Which two arrows in the diagram depict the following transaction: Barney earns $250 for selling scissors and razors to Floyd's Barber Shop.

J and M

REFER TO FIGURE 4: Which two arrows in the diagram depict the following transaction: LaDonna sells 20 pairs of sunglasses at the Oakley store.

K and G

Apple assembles most iPhones in China because the lower wages earned by Chinese workers and their experience in electronics manufacturing reduce the costs of assembling iPhones. This is an example of Apple reacting to which of the three key economic ideas?

People respond to economic incentives.

REFER TO FIGURE 3: If the two countries have the same amount of resources and the same technological knowledge, which country has an absolute advantage in the production of milk?

Tahiti

Suppose the market is initially in equilibrium at price P1 and then the government imposes a tax on every unit sold. Which of the following statements best describes the impact of the tax?

The consumer will bear a smaller share of the tax burden if the demand curve is D1

Suppose a negative technological change in the production of disease-resistant wheat caused the price of wheat

The demand for corn would increase and the equilibrium price of corn would increase.

REFER TO FIGURE 2 : The graph in this figure illustrates an initial competitive equilibrium in the market for sugar at the intersection of D1 and S1 (point A). If there is an increase in the price of fertilizer used on sugar cane and there is a decrease in tastes for sugar-sweetened soft drinks, how will the equilibrium point change?

The equilibrium point will move from A to E.

REFER TO FIGURE 7: The figure above represents the market for canvas tote bags. Assume that the market price is $35. Which of the following statements is true?

There is a surplus that will cause the price to decrease; quantity demanded will then increase and quantity supplied will decrease until the price equals $25.

Which of the following is a macroeconomic question?

What determines the growth rate of gross domestic product?

REFER TO FIGURE 6: If the economy is currently producing at point Y, what is the opportunity cost of moving to point W?

Zero

Which of the following will shift the demand curve for a good?

a decrease in the price of a complementary good

In 2004, hurricanes damaged a large portion of Florida's orange crop. As a result of this, many orange growerswere not able to supply fruit to the market. If, following the hurricane, the price remained at its pre-hurricane level, we would expect to see

a shortage of oranges.

Assume that potatoes are an inferior good. Which of the following would cause both the equilibrium price and equilibrium quantity of potatoes to decrease?

an increase in consumer income

The decision about what goods and services will be produced in a market economy is made by

consumers and firms choosing which goods and services to buy or produce.

The law of demand implies, holding everything else constant, that as the price of gelato

decreases, the quantity of gelato demanded will increase.

Economists spend much of their time

describing how choices are made and analyzing the results of those choices.

As women's wages have risen relative to men's wages, the opportunity cost to women of doing housework has________ than has the opportunity cost to men.

increased more

Billie's Billiard Barn has seen its business slow down ever since Patti's Ping Pong Parlour opened up across thestreet. Since the opening of Patti's Ping Pong Parlour, the opportunity cost of shooting pool at Billie's Billiard

increased.

REFER TO FIGURE 1 : Assume a technological advancement greatly reduces the cost to produce batteries for its Taycan sports car. This is best represented by the

movement from E to F in Graph A.

REFER TO FIGURE 1 : Assume that in 2025, Porsche temporarily shuts down part of it manufacturing facilities for an extensive renovation, and this reduces the amount of production capacity available for both types of vehicles.

movement from K to L in Graph C.

If a straight line passes through the point x = 24 and y = 8 and also through the point x = 8 and y = 16, the slope of this line is

negative one-half.

Suppose that some teachers have decided that economic and financial uncertainty have made the prospect of retiring more risky, and therefore carry a higher cost than not retiring. By using all available information as they act to achieve their goals, these teachers are exemplifying the economic idea that

people are rational.

Suppose the U.S. government encouraged new medical school graduates to take over existing practices from doctors wishing to retire by paying both the new and retiring doctors $100,000. These doctors would be exemplifying the economic idea that

people respond to economic incentives.

The term "property rights" refers to

the ability to exercise control over one's own resources within the confines of the law

REFER TO FIGURE 8 : The figure above represents the market for pecans. Assume that this is a competitive market.At a quantity of 4,000 pounds

the marginal benefit of pecans is greater than the marginal cost; therefore, output is inefficiently low.

REFER TO FIGURE 8 : The figure above represents the market for pecans. Assume that this is a competitive market.At a quantity of 12,000 pounds

the marginal cost of pecans is greater than the marginal benefit; therefore, output is inefficiently high.

REFER TO FIGURE 8 : The figure above represents the market for pecans. Assume that this is a competitive market.If the price of pecans is $3

the quantity supplied is less than the economically efficient quantity.

A decrease in the equilibrium price for a product will result

when there is an increase in supply and a decrease in demand for the product.