Micro ECON Midterm Flashcards
Final exam
A point or combination that is on the production possibilities frontier is
Multiple Choice
- attainable and efficient.
- attainable, but not efficient.
- unattainable and efficient.
- unattainable, but not efficient.
Attainable and efficient
A person should consume more of something when its marginal
Multiple Choice
- benefit exceeds its marginal cost.
- cost exceeds its marginal benefit.
- cost equals its net marginal benefit.
- benefit is positive.
Benefit exceeds its marginal cost
Sophie is willing to sell her used economics textbook for $30. Ruby is willing to pay $60 for the used economics textbook. Sophie and Ruby agree on a price of $45. The gains from trade for Sophie equals ________ and the gains from trade for Ruby equals ________.
Multiple Choice
$30, $60
$0, $30
$15, $15
$30, $0
$15, $15
Work
45-30=15
60-45=15
Use the following table to answer the question below.
Alex Production
Scarves Knitted # of Sweaters Knitted
0 4
3 3
6 2
9 1
12 0
Natalia’s Production
# Scarves Knitted # of Sweaters Knitted
0 4
2 3
4 2
6 1
8 0
What is Natalia’s opportunity cost of knitting a scarf?
Multiple Choice
3 sweaters
1/3 of a sweater
2 sweaters
1/2 of a sweater
1/2 Sweaters
divide her max production of sweaters by max production of scarves; 4/8 = ½
Which of the following is not a main function of the entrepreneur?
Multiple Choice
- to make routine pricing decisions
- to innovate
- to assume the risk of economic losses
- to make strategic business decisions
To make routine pricing decisions
Use the following table to answer the question below.
Dave's Production Pounds of Green Beans Pounds of Corn 0 160 20 120 40 80 60 40 80 0
Jorge's Production Pounds of Green Beans Pounds of Corn 0 320 20 240 40 160 60 80 80 0
The terms of trade for 1 pound of green beans must lie between _____ and _____ pounds of corn.
Multiple Choice
2, 4
1, 4
1/4, 1
1/4, 1/2
2,4
Work
40/80=2
160/40=4
When a state government chooses to build more roads, the resources used are no longer available for public education programs. This dilemma illustrates the concept of
Multiple Choice
- production expenses.
- unemployment issues.
- unintended consequences.
- scarcity.
Scarcity
Jack and Jill spend their time painting rooms and completing small repair projects. The table below shows their production possibilities schedules, which describe combinations of painting and repair projects they each can produce efficiently in a week.
Production Possibilities Schedules
Jack
Painting Repair Projects
10 0
0 5
Jill
Painting Repair Projects
6 0
0 8
Which of the following statements is true if Jack and Jill base their work on comparative advantage and specialization?
Multiple Choice
- Jack should paint rooms and Jill should complete the repair projects.
- Jill should paint rooms and Jack should complete the repair projects.
- Jack should paint rooms and complete the repair projects.
- Jill should paint rooms and complete the repair projects.
Jack should paint rooms and Jill should complete repair projects
Cash held by a bank in its vault is a part of the bank’s
Multiple Choice
reserves.
liabilities.
money supply.
net worth.
Reserves
Which market is most likely to be a competitive market?
Multiple Choice
- the market for a share of Walmart stock
- the market for new Tesla cars
- the market for cable television
- the market for college education
The market for a share of Walmart stock
Explain
a marketplace where there are a large amount of buyers and sellers and no single buyer or seller can affect the market.
Who gains in a voluntary trade?
Multiple Choice
- The buyer only.
- The seller only.
- Both the buyer and the seller.
- Both the buyer and the seller, but the seller usually gains more.
Both the buyer and the seller
How does competition affect entrepreneurs?
Multiple Choice
- Lowers prices for consumers
- Raises prices for consumers
- Lowers the cost to produce goods
- Nothing, entrepreneurs do not face competition the same way as businesses
Lowers prices for consumers
Which of the following is NOT a result of specialization?
Multiple Choice
- Innovation of existing products
- Development of new products
- One-sided benefits
- Wealth
One-sided benefits
The role of the entrepreneur in society is to
Multiple Choice
- provide capital to the firm which the management combines with labor.
- bring the factors of production together and take the risks of producing.
- control the land upon which all production takes place to get the most rent.
- regulate what products are considered safe to market.
Bring the factors of production together and take the risks of producing
Which of the following would prevent “free entry” into a market?
Multiple Choice
Open trade
Patents
Opportunity costs
Externalities
Patents
explained
a condition in which firms can freely enter the market for an economic good by establishing production and beginning to sell the product.
A neighbor plants flowers in their front yard, which you can view and enjoy from your window. From your perspective, this is an example of
Multiple Choice
an externality.
an opportunity cost.
property rights.
marginal analysis.
An externality
In understanding and analyzing “market demand,” we focus on how much all buyers are
Multiple Choice
- willing and wanting to buy at different prices.
- actually buying now and in the recent past at various prices.
- willing and able to buy with their given income.
- willing and able to buy at different prices.
Willing and able to buy at different prices
As a result of a decrease in the price of online streaming movies, consumers download more movies online and buy fewer DVDs. This is an illustration of
Multiple Choice
consumer sovereignty.
the income effect.
the substitution effect.
diminishing marginal utility.
the substitution effect
Picture on Midterm Question 19
Refer to the three demand curves for noodles and assume noodles are an inferior good. Which of the following would shift the demand for noodles from D1 to D2?
Multiple Choice
- an increase in the price of noodles
- an increase in consumer incomes
- a decrease in consumer incomes
- a decrease in the price of noodles
A decrease in consumer incomes
Picture on Midterm Question 20
Refer to the three demand curves for coffee. Which of the following would shift the demand for coffee from D1 to D3?
Multiple Choice
- an increase in the number of buyers of coffee
- a decrease in the number of buyers of coffee
- an expected increase in the price of coffee in the future
- a decrease in the price of coffee
A decrease in the number of buyers of coffee
What would happen to the demand curve for Coke if Pepsi went on sale at the grocery store?
Multiple Choice
Shift to the right.
Stay the same.
Shift to the left.
Unsure, there’s not enough information.
Shift to the left
Which of the following will not cause a change in the demand for product A?
Multiple Choice
- a change in the number of buyers
- a change in the price of A
- a change in consumer incomes
- a change in tastes
A change in the price of A
Hot dogs and hamburgers might be considered_____goods compared to steak.
Multiple Choice
normal
complementary
substitutable
inferior
inferior
If X is a normal good, an increase in income will shift the
Multiple Choice
- supply curve for X to the left.
- supply curve for X to the right.
- demand curve for X to the left.
- demand curve for X to the right.
Demand curve for X to the right
In the market for personal computers, which of the following would cause a decrease in supply?
Multiple Choice
- Businesses are required to pay a higher tax on production of personal computers.
- There is a reduction in consumer preference for personal computers.
- The price of personal computers falls.
- There is a decrease in price of plastic, an input into the production of personal computers.
Businesses are required to pay a higher tax on production of personal computers
Picture on Midterm Question 26
The diagram shows three supply curves for cars today. Which of the following would cause the supply of cars to shift from S1 to S2?
Multiple Choice
- expectations of higher car prices in the future
- expectations of lower car prices in the future
- an increase in the price of cars in the market
- a decrease in the number of car producers
Expectations of lower car prices in the future
The wage of fast food workers has decreased. How will the market for fast food respond?
Multiple Choice
- The supply of fast food will increase.
- The supply of fast food will decrease.
- The quantity supplied of fast food will increase.
- The quantity supplied of fast food will decrease.
The supply of fast food will increase
The law of supply indicates that, all else held constant,
Multiple Choice
- producers will be willing and able to offer more of a product at high prices than at low prices.
- the product supply curve is downward-sloping.
- consumers will be willing and able to purchase less of a good at high prices than at low prices.
- producers will be willing and able to offer more of a product at low prices than at high prices.
Producers will be willing and able to offer more of a product at high prices than at low prices
Picture on Midterm Question 29
The figure above shows three supply curves for wheat. Which of the following would cause the supply of wheat to shift from S1 to S3?
Multiple Choice
- a tax on wheat production
- a subsidy for wheat production
- an increase in the price of wheat
- a decrease in the price of wheat
a tax on wheat production
Picture on Midterm Question 30
Which of the following best depicts the change in the market for apples if producing apples becomes more efficient due to the use of watering technology, which allows farmers to know if the trees are being over- or under-watered?
Multiple Choice
- movement from a to b
- movement from b to a
- shift from S2 to S1
- shift from S1 to S2
shift from S1 to S2
The table below shows the weekly supply for hamburgers in a market where there are just three sellers.
Price Seller 1 Seller 2 Seller 3
$5 8 5 4
4 6 4 3
3 4 3 2
2 2 2 1
If there were 200 sellers in the market, each with a supply schedule identical to seller 3 in the table above, then the weekly quantity of hamburgers supplied in the market at a price of $4 would be
Multiple Choice
800.
600.
400.
200.
600
Work 3*200=600
The table below shows the weekly supply for hamburgers in a market where there are just three sellers.
Price Seller 1 Seller 2 Seller 3
$5 8 5 4
4 6 4 3
3 4 3 2
2 2 2 1
If seller 3 exits the market (goes out of business), then the weekly market quantity of hamburgers supplied at a price of $4 will be
Multiple Choice
6
9
10
13
10
Work
6+4=10
Picture a competitive market with the usual upward sloping supply curve and downward sloping demand curve. If the current price is creating a shortage, then market forces will cause the price to adjust and
Multiple Choice
- quantity supplied will increase.
- quantity supplied will decrease.
- quantity demanded will increase.
- demand will decrease.
Quantity supplied will increase
Picture on Midterm Question 34
Refer to the graph, which shows that the demand for beef shifted from D1 and D2. The change in equilibrium from E1 to E2 is most likely to result from a(n)
Multiple Choice
- decrease in consumer incomes.
- increase in the cost of cattle feed.
- increase in the price of pork.
- decrease in the tax on beef products.
Decrease in consumer incomes
Which of the following statements is correct?
Multiple Choice
- If demand increases and supply decreases, equilibrium price will fall.
- If supply increases and demand decreases, equilibrium price will fall.
- If demand decreases and supply increases, equilibrium price will rise.
- If supply declines and demand remains constant, equilibrium price will fall.
If supply increases and demand decreases, equilibrium price will rise
What combination of changes would most likely decrease the equilibrium price?
Multiple Choice
- supply decreases and demand increases
- demand increases and supply increases
- demand decreases and supply decreases
- supply increases and demand decreases
Supply increases and demand decreases
The table below shows the demand and supply schedule for good Z.
Market Demand Price Market Supply
100 $10 50
75 20 75
50 30 100
25 40 125
What is the equilibrium price and quantity?
Multiple Choice
- $20 and 75 units
-$10 and 100 units
- $40 and 125 units
- $75 and 20 units
$20 and 75 units
A government will create a surplus in a market when it sets a price
Multiple Choice
- ceiling above the equilibrium price.
- floor above the equilibrium price.
- floor below the equilibrium price.
- ceiling below the equilibrium price.
Floor above the equilibrium price
Picture on Midterm Question 39
Assume the government imposes $2.25 tax on suppliers, which results in a shift of the supply curve from S1 to S2. The price the consumer pays for the product after the tax is imposed on the suppliers is
Multiple Choice
$1.25.
$2.50.
$3.50
$2.25.
$3.50
A tax on buyers will cause the equilibrium price paid by the consumer to ______ and the equilibrium quantity to ______.
Multiple Choice
- increase, increase
- increase, decrease
- decrease, increase
- decrease, decrease
Increase and decrease
There is excess production of tomatoes in the market. This implies that
Multiple Choice
- the current price is above the equilibrium level.
- the price will be rising, as a result.
- supply of tomatoes is more than the demand.=
- quantity demanded is more than quantity supplied.
The current price is above the equilibrium level
Use the table below to answer the following question.
Units Max Will to Pay Market Price mini accept price
1 $14 $10 $6
2 12 10 8
3 10 10 10
4 8 10 12
5 6 10 14
6 4 10 16
At what level of output is productive efficiency achieved?
Multiple Choice
3
4
5
6
3
Picture on Midterm Question 43
At equilibrium, the producer surplus would be represented by the area
Multiple Choice
b.
a.
a + b.
b + c + d.
b
Picture on Midterm Question 44
What area represents producer surplus after the government imposes the excise tax on the market?
Multiple Choice
- triangle GHI
- triangle FHE
- rectangle BGHE
-triangle AGB
Triangle FHE
Picture on Midterm Question 45
If a price floor in this market is set at P2, then producer surplus equals area
Multiple Choice
b + c.
b.
c.
c + b + d.
b + c
Jennifer buys a piece of costume jewelry for $33 for which she was willing to pay $42. The minimum acceptable price to the seller, Nathan, was $30. Jennifer experiences
Multiple Choice
- a consumer surplus of $12 and Nathan experiences a producer surplus of $3.
- a producer surplus of $9 and Nathan experiences a consumer surplus of $3.
- a consumer surplus of $9 and Nathan experiences a producer surplus of $3.
- a producer surplus of $9 and Nathan experiences a producer surplus of $12.
A consumer surplus of $9 and Nathan experiences a producer surplus of $3
A government-imposed price floor has what effect on efficiency?
Multiple Choice
- Consumer surplus decreases.
- Producer surplus increases.
- Consumer and producer surplus increases.
- There is little dead weight loss.
Consumer surplus decreases
If actual production and consumption occur at Q1 and the price is P1
Multiple Choice
- consumer surplus equals area a.
- consumer surplus equals area a + b.
- producer surplus equals area c + b.
- deadweight loss equals area b
Consumer surplus equals area a + b
Picture on Midterm Question 49
If the output level is Q1, then there is missing surplus indicated by the area
Multiple Choice
0abe.
bce.
0eQ1.
ecf.
bce
Charlie is willing to pay $20 for a t-shirt that is priced at $15. If Charlie buys the t-shirt, then his consumer surplus is
Multiple Choice
$5.
$35.
$20.
$300.
$5
Work
20-15=5
