Chapter 1
Chapter 2
Chapter 3
Chapter 4
Chapter 5
100
What are the Five Foundations of Economics?
1. Incentives Matter
2. Life is about trade-offs
3. Opportunity Costs
4. Marginal Thinking
5.Trade creates value
100
What is the difference between a Positive and Normative statement?
Positive Statement- Can be tested and validated, Describes "What is"
Normative Statement- An opinion that cannot be tested or validated, Describes "What ought to be"
100
What Characteristics make a Competitive market:
The goods sold by each vendor are similar/identical
Many buyers and sellers with free entry/exit
No one individual has any influence over the price, all are price-takers
100
Which of the following is most likely to be an inferior good?
a. eyeglasses
b. airplane tickets
c. caviar
d. opera tickets
e. discount bus tickets
E. Discount bus tickets
100
What is the Tax Incidence?
the actual division of the burden of a tax between buyers and sellers in a market. The incidence of the tax is determined by the relative slopes of the demand and supply curves.
200
What are the different types of incentives?
Positive or Negative
Direct or Indirect(unintended consequence)
200
Whate are Endogenous and Exogenous factors?
Endogenous Factors- Variables that can be controlled for inside a model
Exogenous Factors- Variables that cannot be accounted for in a model
200
Assume that in the market for gatorade has a technological advancement, making it cheaper to make gatorade and a 10k for Cancer is about to start, What is the change in Quantity and Price?
Quantity Increases and Price remains ambiguous
200
Which of the following goods is most likely to have high price elasticity of demand?
a. A staple food.
b. A good that forms a very small part of a person’s total budget.
c. A good for which there are many close substitutes.
d. A vital medicine.
e. None of the above.
C. A good for which there are many close substitutes
200
You’d be willing to pay $200 for a daylong admission ticket to a theme park. The cost of the ticket is $120. Your consumer surplus is:
a. $0
b. $80
c. $120
d. $320
B.$80
300
Which of the following is the opportunity cost of going to a Real Madrid Football match?
A. Price of the Tickets
B.Paying for College
C. Price of snacks
D. Sitting next to the opposite team
B. Paying for College
300
What points can be produced now, and how can the reach the unattainable ones?
Produced now- A,B,C,D
Can reach X by new resources or technology being introduced
300
Assume in the market of Hot Coffee, a tropical storm destroys the Coffee bean trees and Winter just started, What is the change in Price and Quantity?
Quantity is ambiguous and Price Increases
300
If the price falls from 6 to 4, the quantity demanded rises from 8000 to 12000, What is the Elasticity of demand? Is it elastic, Inelastic, or Unit Elastic?
ED= -1
ED Unit Elastic
300
Deadweight loss can be thought of as
surplus that is transferred from producers
or consumers and given to
A. the government.
B. competitors in other markets.
C. taxpayers.
D. nobody.
D. Nobody
400
What is the opportunity cost of a farmer planting Corn?
A. The cost of watering the seed
B. Planting Carrots
C. The time cultivating the land
B. Planting Carrots
400
Who has the Absolute Advantage?
Cars Motorcycles
Mitsubishi 60 125
Honda 57 120
Mitsubishi
400
QD= 75-20P and QS=10P
What is Quantity and Price?
Q=25 P=2.5
400
Suppose that an airline knows that it will have 90 passengers per day on a particular route if it charges $200 per ticket; if the fare goes down to $180, the airline will sell 110 tickets per day. What is the airline's price elasticity of demand for this price change? Is it Elastic, Inelastic, or Unit Elastic?How would you describe it?
ED=-1.9
ED= Elastic
If the price goes down by 1%, then QD goes up by 1%
400
Draw a Graph, with the midpoint having a quantity of 50 and a price of 25, with the supply starting at 0 and demand at 100, what is the Consumer, producer, and total surplus?
CS:1875
PS:625
TS:2500
500
Jose decides to increase his time in Trade School. However doing this decreases his time at work. This Illustrates:
A.Trade-offs
B.Incentives
C.Comparative Advantage
D.Markets
A. Trade-offs
500
Who has the comparative advantage?
Chicken tenders Ice Cream
Jose 60 80
Carlos 74 66
Jose has the comparative advantage to make Ice Cream
Carlos has the comparative advantage to make chicken tenders
500
QD=40-5.5P and QS=10+0.5P
What is the Quantity and Price?
Q=12.5
P=5
500
Katherine advertises to sell cookies for $4 a dozen. She sells 50 dozen, and decides that she can charge more. She raises the price to $6 a dozen and sells 40 dozen. What is the elasticity of demand? Is it elastic, inelastic, or unit elastic? how would you write it out?
ED=-0.556
ED inelastic
If the price goes down by 1%, then QD goes down 0.556%
500
Draw a Graph of Supply and Demand, with the midpoint being a Quantity of 200 and Price of 50, what is the Consumer, Producer and Total Surplus? Assume they add a tax wedge limiting Quantity to 75, and the new supplier price is 25 and the new buyer price is 75, What is the new CS, PS, TS and Tax Rev and DWL?
(* Supply starts at 0 and Demand at 100)
Before Tax: CS-5000 PS-5000 TS-10000
After Tax: CS-937.5 PS-937.5 Tax Rev-3750 DWL-3125 TS-5625