Fundamental Economic Concepts + some micro
Competitive Markets
Gov. Policy
International Trade
Behavior of Firms
100
When creating economic models, economists rely LEAST on: observation theory description measurements details
details
100
Which of the following scenarios is NOT a possible result of excess demand? Buyers leave the market. Buyers wait in longer lines. Buyers offer to pay more. Suppliers raise their prices. Suppliers experience shortages.
Buyers leave the market
100
Zaphod produces two-headed laser guns. All of the following costs are variable costs for Zaphod in the short run EXCEPT rent electricity transportation labor raw materials
rent
100
Trade makes people better off because it encourages competition diplomacy autonomy specialization rationality
specialization
100
A firm makes $2000 in total revenues for the day. Monetary costs are $900. This results in a(n) economic profit of $2000 accounting profit of $2900 economic profit of $1100 accounting profit of $1100 total profit of $1100
accounting profit of $1100
200
12. Which of the following statements about scarcity is FALSE? Virtually all resources available to individuals or societies are limited. Trade-offs and opportunity costs exist due to scarcity. The larger the society, the less it experiences scarcity. All individuals face scarcity in their daily lives. Time, energy, knowledge, and capital are all scarce.
The larger the society, the less it experiences scarcity.
200
Operating outside of equilibrium results in deadweight loss producer surplus wealth imbalance consumer surplus recession
deadweight loss
200
All else held equal, which of the following changes in a free housing market always occurs in the long run? Elasticity of supply increases. Landlords make negative economic profits.. Elasticity of demand decreases. Quantity supplied exceeds quantity demanded. The effects of rent controls decrease.
Elasticity of supply increases.
200
An isolated nation enters the international venison market. It will become an exporter if there is an excess demand in the international market the price of venison in the nation is beneath the world price it has a positively sloping PPF curve there is an excess demand in the domestic market producer surplus is greater than consumer surplus
the price of venison in the nation is beneath the world price
200
Taylor currently works as a sales associate at Llama 21. If Alpaca 21 offers Taylor a better-paying job as a store manager, but Taylor chooses to stay at Llama 21, his opportunity cost decreases accounting costs increase economic profit decreases total revenue increases total profit decreases
economic profit decreases
300
A society of five llamas produces $100 worth of goods and services in total. Which of the following situations is Pareto efficient? One llama receives $100, and the rest of the llamas are left with nothing. Two llamas each receive $40, and three llamas are left with nothing. Four llamas each receive $20, and one llama $5. Two llamas each receive $45, two llamas $4 each, and the other llama $1. Each llama receives $15.
One llama receives $100, and the rest of the llamas are left with nothing.
300
If the price of wood increases, what will happen to equilibrium price and quantity in the market for wooden chairs?
price increases quantity decreases
300
Assume that demand for jelly beans is perfectly elastic and that supply of jelly beans is inelastic. The government levies a $.05 tax on each pound of jelly beans. Which of the following statements is true? The consumers and suppliers will split evenly the burden of the tax. The consumers will take the full burden of the tax. The consumers will pay most of the tax. The suppliers will pay most of the tax. The suppliers will take the full burden of the tax.
The suppliers will take the full burden of the tax.
300
Lil Alpaca is a rapper who spends eight hours a day working. In this time period, he can either write four songs or plant eighty petunias. What is the opportunity cost of one song for Lil Alpaca? 20 petunias 10 petunias 320 petunias 80 petunias 60 petunias
20 petunias
300
Davis produces tennis shoes. His total revenue for this first pair is $90, for the second is $175, for the third is $245, and for the fourth is $295. His fixed cost is $100. His total cost for the first pair is $120, for the second is $170, for the third is $240, and for the fourth is $340. How many pairs of tennis shoes should Davis produce?
3
400
Which of the following statements about perfect competition is FALSE? Perfect competition predicts lower prices than those of monopolies. Most real-life markets are perfectly competitive. Buyers and sellers have little power in perfectly competitive markets. Perfect competition estimates the behavior of necessary goods. Perfect competition is used as a benchmark for many markets.
Most real-life markets are perfectly competitive.
400
Which of the following events would NOT shift the market demand curve for apples to the right? an increase in the price of pears an increase in average income for consumers a decrease in the price of apples a threefold increase in the population the discovery that apples help people lose weight
a decrease in the price of apples
400
Deadweight loss is at its lowest when demand is elastic and supply is inelastic supply and demand are both inelastic supply is elastic and demand is inelastic supply and demand are both elastic supply and demand are both unit elastic
supply and demand are both inelastic
400
Jeanine produces lampshades and neckties. The opportunity cost of one lampshade is two neckties. If Jeanine’s PPF curve has lampshades on the vertical axis, what is the curve’s slope?
-1/2
400
Wendy owns a textile factory. She notices that for each additional textile she produces, the marginal cost increases. This is an example of shutdown analysis market failure diminishing returns to scale parallel devaluation economies of scale
diminishing returns to scale
500
Add up the quantity that every consumer will purchase at each possible price to calculate this table.
Market demand schedule
500
Eloise, Jean, and Pierre are the only buyers in the baguette market. The price of baguettes is $5. Eloise is willing to spend $8 for a baguette and $9 for two baguettes. Jean is willing to spend $6 for a baguette and $8 for two baguettes. Pierre is willing to spend $4 for a baguette and $6 for two baguettes. What is the total consumer surplus?
$4
500
The revenue collected by the government from a tax is equal to the area below the amount paid by consumers, above the amount received by suppliers, and left of the new equilibrium quantity below the amount received by suppliers and above the supply curve right of the new equilibrium quantity, above the demand curve, and below the supply curve left of the demand curve and right of the supply curve above the amount paid by consumers and below the demand curve
below the amount paid by consumers, above the amount received by suppliers, and left of the new equilibrium quantity
500
The PPF curves for two countries for butter and salt intersect. Which of the following statements is true? One nation has an absolute advantage. Gains from trade would not exist if the two nations exchanged. One of the two PPF curves is positively sloped. If the two nations traded, then each would produce both butter and salt. Each nation has a comparative advantage.
Each nation has a comparative advantage.
500
Archibald produces socks. When his output is 300 socks, his total costs amount to $500. Archibald’s output increases to 500 socks, and his total costs increase to $350. What is the marginal cost per unit for the additional socks?
0.25
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