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Economics

Terms in this set (33)

Workers at a bicycle assembly plant currently earn the mandatory minimum wage. If the federal government increases the minimum wage by $1.00 per house then it is likely that the
b. Supply of bicycles will shift to the left
Suppose you like to make, from scratch, pies filled with bananas and vanilla pudding. You notice that the price of bananas has increased. As a result, your demand for vanilla pudding would
c. decrease
At the equilibrium price, the quantity of the good that buyers are willing and able to buy
d. exactly equals the quantity that sellers are willing and able to sell
The movement from point A to point B on the graph shows
a. an increase in quantity demanded
It is apparent from the figure that the
d. demand for the good conforms to the law of demand
Savion is restoring a car and has already spent $4000 on the restoration. He expects to be able to sell the car for $5800. Savion discovers that he needs to do an additional $2400 of work to make the car worth $5800 to potential buyers. He could also sell the car now, without completing the additional work, for $3800. What should he do?
b. He should sell the car now for $3800
At what price would there be an excess supply of 400 unites of the good?
b. $35
All else equal, an increase in the use of laptop computers for note-taking would cause a move from
d. y to x
Consider Miray's decision to go to college. If she goes to college, she will spend $24000 on tuition, $12000 on room and board, and $1900 on books. If she does not go to college, she will earn $16000 working in a store and spend $8000 on room and board. Miray's cost of going to college is
b. $45,900
Aiden and Zaria charge people to park on their lawn while attending a nearby craft fair. At the current price of $10, six people park on their lawn. If they raise the price to $15, they know that only five people will want to park on their lawn. Whether they have six or five cars parked on their lawn does not affect their costs. From this information it follows that
c. they would do better charging $15 the $10
Beef is a a normal good. You observe that both the equilibrium price and quantity of beef have fallen over time. Which of the following explanations would be most consistent with this observation?
b. New medical evidence has been released that indicates a negative correlation between a person's beef consumption and life expectance.
The term "market failure" refers to
a. a situation in which the market on its own fails to allocate resources efficiently.
Fossil fuels are considered to be nonrenewable energy sources. Which of the following statements is correct?
b. Fossil fuels are scarce resources.
All else equal, an increase in the income of buyers who consider turkey to be an inferior good would cause a move from
a. Da to Db
Suppose the State of Rhode Island passes a law that increases the tax on beer. As a result, beer consumers who live in Rhode Island start purchasing their beer in surrounding states. Which of the following principles does this best illustrate?
d. People respond to incentives
Suppose the cost of operating a 75 room hotel for a night is $6,000 and there are 5 empty rooms for tonight. If the marginal cost of operating one room for one night is $40, the hotel manager should rent one of the empty rooms only if a customer is willing to pay
a. d. more than $40; because the marginal benefit will exceed the marginal cost
People are willing to pay more for a diamond than for a bottle of water because
b. the marginal benefit of an extra diamond far exceeds the marginal benefit of an extra bottle of water
Efficiency means that
d. Society is getting the most it can from its scarce resources
Which of the following movements would illustrate the effect of an increase in the incomes of parents with school-aged children on the market for soccer lessons?
d. Point C to Point B
Which of the following demonstrates the law of supply?
a. When ketchup prices rose, ketchup sellers increased their quantity supplied of ketchup
Suppose there is a flood in St. Louis, Missouri, that destroys several beer bottling facilities. Which of the following would not be a direct result of this event?
c. Buyers would not be willing to buy as much as before at each relevant price.
Savion's aunt gave him $25 for his birthday with the condition that Savion buys himself something. In deciding how to spend the money, Savion narrows his options down to four choices; Option 1, Option, 2, Option 3, and Option 4. Each option costs $25. Finally, he decides on Option 2. The opportunity cost of this decision is
a. The value to Savion of the option he would have chosen had Option 2 not been available.
When computing the opportunity cost of attending a a professional football game as a spectator, you should include
b. the price you pay for the tickets and the value of your time
Efficiency
a. Refers to how much a society can produce with its resources. Equality refers to how evenly the benefits from using resources are distributed among members of society.
Suppose the number of buyers in a market increases and a technological advancement occurs also. What would we expect to happen in the market?
a. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous
What will happen to the equilibrium price and quantity of new cars if the price of gasoline rises, the price of steel rises, public transportation becomes cheaper and more comfortable, and auto-workers negotiate higher wages?
d. Quantity will fall, and the effect on price is ambiguous
Soup is an inferior good if the demand
d. for soup falls when income rises.
The shift from S' to S in the market for chocolate cake could be caused by
b. an increase in the price of butter
Which of the following events would cause th eprice of oranges to fall?
a. The price of land throughout Florida decreases, and Florida produces a significant proportion of the nations oranges .
If these are the only four sellers in the market, then when the price decreases from $8 to $6, the market quantity supplied
b. decreases by 12 unites
What would happen to the equilibrium price and quantity of macaroni and cheese if consumers' incomes fall and macaroni and cheese is an inferior good?
d. both the equilibrium price and quantity would increase.
Equilibrium quanitity must decrease when
b. both demand and supply decrease.
Suppose the income of buyers in a market for an inferior good deceases and a technological advancement occurs also. What would we expect to happen in the market?
c. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.
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