ECO 365 MART T Educ Planning--eco365mart.com

1. ECO 365T All Practice and Apply Assignments FOR MORE CLASSES VISIT www.eco365mart.com ECO 365T Assignment Week 1 Practice The Fundamentals of Economic Quiz ECO 365T Assignment Week 1 Apply The Fundamentals of Economics Homework ECO 365 Assignment Week 2 Practice Market Dynamics and Efficiency Quiz ECO 365 Assignment Week 2 Apply Market Dynamics and Efficiency Homework ECO 365 Assignment Week 3 Practice Elasticity and Consumer Choice Quiz ECO 365 Assignment Week 3 Apply: Elasticity and Consumer Choice Homework ECO 365 Assignment Week 4 Practice The Microeconomics of Product Markets Quiz ECO 365 Assignment Week 4 Apply The Microeconomics of Product Markets Homework ECO 365 Assignment Week 5 Practice The Microeconomics of Resource Markets and Trade Quiz ECO 365 Assignment Week 5 Apply The Microeconomics of Resource Markets and Trade Homework ============================================== ECO 365T Assignment Week 1 Apply The Fundamentals of Economics Homework(100% Correct) (July, 2019) FOR MORE CLASSES VISIT

2. www.eco365mart.com ECO 365 Week 1 Apply: The Fundamentals of Economics Homework Review the Week 1 The Fundamentals of Economics Quiz in preparation for this assignment. Complete the Week 1 The Fundamentals of Economics Homework in McGraw-Hill Connect®. These are randomized questions. Note: You have only one attempt available to complete assignments. Grades must be transferred manually to eCampus by your instructor. Don’t worry, this might happen after the due date. The opportunity cost of an action is always equal to: the things you could have done instead of the action you chose to undertake. the time you give up to undertake the action. the money you give up to undertake the action. the next-best alternative for the resources used to undertake the action. Bob, the owner of a local deli in town, needs to purchase something that economists would label as ―capital‖ to help him produce sandwiches. Which of the following is an example of capital? A meat slicer to cut ham for sandwiches An additional worker Ham for the sandwiches A new idea that automates the making of sandwiches Which of the following is a labor resource? Multiple Choice a computer programmer a computer a piece of software used by a firm silicon (sand) used to make computer chips Marginal cost can be defined as the change in Multiple Choice cost resulting from one less unit of production. benefit resulting from one more unit of production. cost resulting from one more unit of production. benefit resulting from one less unit of production. The two basic markets shown by the simple circular flow model are Multiple Choice product and resource. capital goods and consumer goods. household and business. free and controlled. Macroeconomics approaches the study of economics from the viewpoint of Multiple Choice the operation of specific product and resource markets. the entire economy. governmental units. individual firms. The basic truth that underlies the study of economics is the fact that we all face Multiple Choice risk. scarcity. taxes. death. In the circular flow model of the market system, households Multiple Choice buy products and resources. sell products and resources. sell products and buy resources. buy products and sell resources. Use the following market data to answer the question below. Price per Unit

3. shown in the table, the equilibrium quantity is Multiple Choice 1,600. 900. 1,200. 1,400. Microeconomics is concerned with Multiple Choice the aggregate or total levels of income, employment, and output. how government debt affects aggregate economic activity. the establishing of an overall view of the operation of the aggregate economic system. a detailed examination of specific economic units that make up the economic system. Marcus budgets $120 a week for groceries. When the price of all food goes up by 10% he buys less salmon. This can best be explained by: diminishing marginal utility. the substitution effect. a change in income. the income effect. Which of the following scenarios is an example of a person interacting outside of a market? Mark places his comic book collection up for sale on eBay. Young buys fresh radishes at the local farmers’ market. Melissa votes for her favorite performer at a local talent show. Isabella agrees to fix Miguel’s sink if Miguel paints Isabella’s porch. The table below represents the demand for bottles of sunscreen at Daytona Beach on a sunny June day. Demand for Sunscreen Price (dollars) Quantity of Sunscreen Demanded (bottles) $4 6,800 8 6,400 10 6,000 12 5,600 If the price of a bottle of sunscreen is $8, what will be the quantity demanded? 1,600 bottles 6,400 bottles 6,000 bottles 8,000 bottles Markets can: make buyers and sellers better off. force buyers to buy things they do not want to buy. force producers to make things they do not want to make. provide unlimited goods and services. If product Y is an inferior good, a decrease in consumer incomes will Multiple Choice make buyers want to buy less of product Y. shift the demand curve for product Y to the right. shift the demand curve for product Y to the left. not affect the sales of product Y. An increase in the demand for music downloads indicates that more music downloads are Multiple Choice demanded because music download prices have decreased. demanded even if prices of music downloads stay the same. demanded because sellers are selling more music downloads. demanded because sellers are putting music downloads on sale. When economists speak of ―demand‖ in a particular market, they refer to Quantity Purchased by Consumer Quantity Sold by Producer $5 2,000 0 10 1,800 300 15 900 25 1,200 1,200 30 1,000 1,600 600 20 1,500 In the market 1,400 7,200 6

4. Multiple Choice how much of an item buyers want to buy at a given price. one point on the demand curve. the whole demand curve or schedule. one price-quantity combination on the demand schedule. The demand schedule for a product shows the relationship between how much of the product buyers are willing and able to buy and the Multiple Choice product’s price. buyers’ incomes. time period, say, from one month to the next. cost of producing the product. All else held constant, the law of demand suggests that as Multiple Choice the price of tablets decreases, the quantity of tablets demanded will increase. the demand for tablets increases, the price of tablets will increase. the price of tablets decreases, the quantity of tablets demanded will decrease. income increases, the quantity of tablets demanded will increase. When economists say that the demand for a product has decreased, they mean that Multiple Choice the demand curve has shifted to the right. consumers are now willing and able to buy less of this product at each possible price. the product has become particularly scarce for some reason. the product has become more expensive and thus consumers are buying less of it. Which of the following scenarios would likely shift the supply curve for potatoes to the right (increase in supply)? Potato growers expect the price of potatoes to be lower this year than last year. The price of fertilizer increases. Teenagers in potato-farming towns leave to go to college. A new harvester enables farmers to bring in ripe potatoes twice as fast as they did before. Which of the following scenarios would likely shift the supply of cars to the left (decrease in supply)? The price of automotive paint decreases. Automobile workers become more productive. The price of steel and aluminum increase. The price of cars decreases. Use the figure below to answer the following question. The diagram shows three supply curves for apples today. Which of the following would cause the current supply of apples to shift from S1 to S3? Multiple Choice expectations of lower apple prices in the future a decrease in the price of apples in the market an increase in the number of corn farmers expectations of higher apple prices in the future Which of the following statements is true about supply? Multiple Choice As price decreases, producers are willing and able to put more of the good on the market for sale. As price increases, producers are willing and able to put more of the good on the market

5. for sale. Supply refers to the amount of inventory that sellers have in their warehouses. There is an inverse relationship between price and quantity supplied. Use the figure below to answer the following question. The diagram above shows three supply curves for apples. A movement from point a to point b is caused by a change in the Multiple Choice price of resources used to produce apples. number of apple farmers. technology of apple farming. price of apples in the market. In understanding and analyzing ―market supply,‖ we focus on how much all firms Multiple Choice have sold in the recent past at various prices. are willing and able to supply at different prices. want to supply at a given price. will supply in the future at various prices. When economists say that the supply for a product has decreased, they mean that the Multiple Choice supply curve has shifted to the right. product has become more expensive and thus consumers are buying less of it. supply curve has shifted to the left. product has become particularly abundant for some reason. Use the figure below to answer the following question. 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 a decrease in the number of car producers expectations of lower car prices in the future an increase in the price of cars in the market expectations of higher car prices in the future Use the figure below to answer the following question. The figure above shows three supply curves for wheat. Which of the following would cause the quantity of wheat supplied to decrease from point b to point a? Multiple Choice a tax on wheat production a decrease in the price of wheat an increase in the price of wheat a subsidy for wheat production An increase in the supply of music downloads indicates that more music downloads will be Multiple Choice demanded, because sellers are putting music downloads on sale. supplied, because music download prices have decreased. demanded, because sellers are selling more music downloads. supplied, even if prices of music downloads stayed the same. ============================================== ECO 365T Assignment Week 1 Practice The Fundamentals of Economic Quiz (100% Correct) (July, 2019)

6. FOR MORE CLASSES VISIT www.eco365mart.com ECO 365 Week 1 Practice The Fundamentals of Economic Quiz Complete the Week 1 The Fundamentals of Economics Quiz in McGraw-Hill Connect®. These are randomized questions. Note: You have unlimited attempts available to complete practice assignments. The highest scored attempt will be recorded. These assignments have earlier due dates, so plan accordingly. Grades must be transferred manually to eCampus by your instructor. Don’t worry, this might happen after the due date. The opportunity cost of an action is always equal to: the next-best alternative for the resources used to undertake the action. the things you could have done instead of the action you chose to undertake. the time you give up to undertake the action. the money you give up to undertake the action. The fish in the ocean are what type of market resource? Land Capital Entrepreneurial ability Labor Which of the following scenarios most accurately reflects the concept of scarcity? The steak Henry did not buy because he is a vegetarian. The Smith Household produces an average of three bags of trash a week. Sienna enjoys viewing flowers in the city garden during her walk. Brett is a farmer with an open field on which he can plant either soybeans or corn. Bob, the owner of a local deli in town, needs to purchase something that economists would label as ―capital‖ to help him produce sandwiches. Which of the following is an example of capital? Ham for the sandwiches An additional worker A new idea that automates the making of sandwiches A meat slicer to cut ham for sandwiches In the circular flow model of the market system, households Multiple Choice buy products and resources. sell products and resources. buy products and sell resources. sell products and buy resources. Use the following graph of the market for milk to answer the question below. In this market, the equilibrium price is _______ and equilibrium quantity is _______. Multiple Choice $28 per gallon; 150 million gallons $1.00 per gallon; 35 million gallons $1.50 per gallon; 30 million gallons $1.50 per gallon; 28 million

7. gallons Use the following graph to answer the question below. At a quantity of 130, marginal benefit equals ______ and marginal cost equals _____. Multiple Choice $1.60, $0.50 $1.00, $1.00 $0.50, $1.60 $1.60, $1.60 Use the following market data to answer the question below. Price per Unit Quantity Purchased by Consumer Quantity Sold by Producer $5 2,000 0 10 1,800 600 20 1,400 900 25 1,500 In the market shown in the table, the equilibrium quantity is Multiple Choice 900. 1,400. 1,600. 1,200. The problems of inflation and unemployment are Multiple Choice not relevant to the U.S. economy. major topics of microeconomics. major topics of macroeconomics. only relevant to European economies. The circular flow model illustrates Multiple Choice how natural and other resources are created. how money is created by the banking system. the importance of having a central plan for the economy. the interdependence of businesses and consumers. The economizing problem is essentially one of deciding how to make the best use of Multiple Choice limited resources to satisfy limited economic wants. unlimited resources to satisfy limited economic wants. unlimited resources to satisfy unlimited economic wants. limited resources to satisfy unlimited economic wants. Microeconomics is concerned with Multiple Choice how government debt affects aggregate economic activity. a detailed examination of specific economic units that make up the economic system. the establishing of an overall view of the operation of the aggregate economic system. the aggregate or total levels of income, employment, and output. The basic truth that underlies the study of economics is the fact that we all face Multiple Choice taxes. risk. scarcity. death. Which of the following is not a main function of the entrepreneur? Multiple Choice to make routine pricing decisions to make strategic business decisions to assume the risk of economic losses to innovate The four factors of production (or types of resources) are Multiple Choice land, labor, capital, and entrepreneurial ability. land, labor, capital, and money. labor, capital, entrepreneurial ability, and money. labor, capital, technology, and entrepreneurial ability. Which of the following is a land resource? Multiple Choice a machine for detecting earthquakes natural gas an oil drilling rig a farmer The main function of the entrepreneur is to 300 15 1,600 1,200 1,200 30 1,000

8. Multiple Choice create market demand. make routine pricing decisions. purchase capital. innovate. The table below represents the demand for bottles of sunscreen at Daytona Beach on a sunny June day. Demand for Sunscreen Price (dollars) Quantity of Sunscreen Demanded (bottles) $4 7,200 6 12 5,600 If the price of a bottle of sunscreen is $8, what will be the quantity demanded? 6,000 bottles 1,600 bottles 8,000 bottles 6,400 bottles Marcus budgets $120 a week for groceries. When the price of all food goes up by 10% he buys less salmon. This can best be explained by: diminishing marginal utility. the substitution effect. the income effect. a change in income. Which of the following scenarios is an example of a person interacting outside of a market? Mark places his comic book collection up for sale on eBay. Young buys fresh radishes at the local farmers’ market. Melissa votes for her favorite performer at a local talent show. Isabella agrees to fix Miguel’s sink if Miguel paints Isabella’s porch. Tastes and preferences generally do not change for goods or services in markets. False True When economists speak of ―demand‖ in a particular market, they refer to Multiple Choice the whole demand curve or schedule. how much of an item buyers want to buy at a given price. one point on the demand curve. one price-quantity combination on the demand schedule. In understanding and analyzing ―demand,‖ we focus on how much of a product the buyers are Multiple Choice willing and able to buy at different prices. actually buying now and in the recent past at various prices. willing and wanting to buy at different prices. willing and able to buy with their given income. The most important purpose of a market is to Multiple Choice bring buyers and sellers together so they can trade. bring buyers and sellers together so they can argue. bring buyers and sellers together so they can barter. increase the sellers’ wealth. An increase in the demand for music downloads indicates that more music downloads are Multiple Choice demanded because sellers are selling more music downloads. demanded even if prices of music downloads stay the same. demanded because sellers are putting music downloads on sale. demanded because music download prices have decreased. All else held constant, an increase in the price of tablets will result in a Multiple Choice leftward shift of the demand curve for tablets. 6,800 8 6,400 10 6,000

9. movement up and to the left along the demand curve for tablets. rightward shift of the demand curve for tablets. decrease in the demand for tablets. When economists say that the demand for a product has decreased, they mean that Multiple Choice the product has become more expensive and thus consumers are buying less of it. consumers are now willing and able to buy less of this product at each possible price. the demand curve has shifted to the right. the product has become particularly scarce for some reason. When the price of a product increases, consumers shift their purchases to other products whose prices are now relatively lower. This statement describes Multiple Choice the income effect. the rationing function of prices. the substitution effect. an inferior good. Prices usually allocate resources efficiently because they allocate Multiple Choice consumption to the highest cost of good or service. consumption to the lowest value good or service. resources to the highest value good or service. resources to the lowest value good or service. If the price of Pepsi decreases, all else held constant, then we’d expect to see a consequent shift of the demand curve for Multiple Choice Coke to the left. Pepsi to the left. Pepsi to the right. Coke to the right. The horizontal axis of a graph that shows a market demand curve indicates the Multiple Choice different prices at which a product can be purchased. various quantities of a product at which the market will be cleared. quantities that consumers are willing and able to buy at various prices. number of consumers who are in the market for a product. All else held constant, the law of demand suggests that as Multiple Choice the price of tablets decreases, the quantity of tablets demanded will decrease. income increases, the quantity of tablets demanded will increase. the price of tablets decreases, the quantity of tablets demanded will increase. the demand for tablets increases, the price of tablets will increase. In moving along a demand curve, which of the following is not held constant? Multiple Choice price expectations the price of the product for which the demand curve is relevant people’s tastes and preferences consumer incomes Economists use the term ―demand‖ to refer to Multiple Choice a particular price-quantity combination on a stable demand curve. a schedule of various combinations of market prices and quantities demanded. anupsloping line on a graph that relates consumer

10. purchases and product price. the total amount spent on a particular commodity over a fixed time period. Imagine that the market supply of peaches comes from Georgia (GA) and South Carolina (SC). The supply schedule below shows the quantity of peaches supplied in each state at each price. Individual and Market Supply of Peaches Quantity of Peaches Supplied (pounds) Price (dollars per pound) GA SC Market $10 20,000 18,000 15,000 31,000 31,000 6 12,000 24,000 4 8,000 9,000 17,000 17,000 2 4,000 10,000 10,000 Instructions: Enter your answers as a whole number. 1. In the table, complete the column labeled ―Market.‖ 1. How many pounds of peaches will be supplied to the market when the price is $6 per pound? 24,000 pounds Which of the following scenarios would likely shift the supply of cars to the left (decrease in supply)? Automobile workers become more productive. The price of cars decreases. The price of steel and aluminum increase. The price of automotive paint decreases. Use the figure below to answer the following question. An increase in price, all else held constant, would cause a change from Multiple Choice point 4 to point 5. point 5 to point 1. point 3 to point 4. point 1 to point 3. In order to derive the market supply curve from individual supply curves, we add up the Multiple Choice total number of sellers in the market at a given time. various quantities that individual sellers are willing and able to supply at different prices. costs that all individual sellers incur in producing the product. various prices that individual sellers are charging for the quantities of the product available. Use the figure below to answer the following question. The diagram shows three supply curves for apples. Which of the following would cause the supply of apples to shift from S1 to S3? Multiple Choice a decrease in the price of resources used to produce apples a decrease in the price of apples in the market a decrease in the number of apple farmers an increase in the number of apple farmers Use the figure below to answer the following question. 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 lower car prices in the future a decrease in the number of car producers an increase in the price of cars in the market expectations of higher car 38,000 38,000 8 16,000 12,000 24,000 6,000

11. prices in the future Use the figure below to answer the following question. The figure shows three supply curves for wheat. Which of the following would cause the supply of wheat to shift from S1 to S2? Multiple Choice an increase in the price of water an increase in the price of wheat a new tax on wheat production a decrease in the price of water Use the figure below to answer the following question. The figure above shows three supply curves for wheat. Which of the following would cause the quantity of wheat supplied to increase from point a to point b? Multiple Choice a decrease in the price of wheat a subsidy for wheat production a tax on wheat production an increase in the price of wheat The vertical axis of a graph that shows a market supply curve indicates the Multiple Choice number of sellers who are in the market for this product. various quantities of output at which the market will be cleared. cost of the amount of output produced. prices at which firms would be willing and able to sell their different products. Use the figure below to answer the following question. The figure above shows three supply curves for wheat. Which of the following would cause the supply of wheat to shift from S1 to S2? Multiple Choice a subsidy for wheat production an increase in the price of wheat a decrease in the price of wheat a tax on wheat production Use the figure below to answer the following question. The figure above shows three supply curves for wheat. Which of the following would cause the supply of wheat to shift from S1 to S2? Multiple Choice a decrease in consumer incomes, assuming wheat is a normal good a change in consumer tastes away from wheat bread the development of a more effective insecticide against cutworms an increase in the price of fertilizer Use the figure below to answer the following question. 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 subsidy for wheat production a decrease in the price of wheat a tax on wheat production an increase in the price of wheat Use the figure below to answer the following question. The figure above shows three supply curves for wheat. Which of the following would cause the quantity of wheat supplied to decrease from point b to point a? Multiple Choice an increase in the price of wheat a tax on wheat production a decrease in the price of wheat a subsidy for wheat production In understanding and analyzing

12. ―market supply,‖ we focus on how much all firms Multiple Choice have sold in the recent past at various prices. want to supply at a given price. are willing and able to supply at different prices. will supply in the future at various prices. All else being equal, if the price of a product decreases, we would expect Multiple Choice quantity supplied to decrease. supply to decrease. demand to increase. quantity supplied to increase. When economists say that the supply for a product has increased, they mean that the Multiple Choice product has become particularly scarce for some reason. supply curve has shifted to the left. product has become more expensive and thus consumers are buying less of it. supply curve has shifted to the right. Which of the following can best be characterized as a subject of macroeconomics? An examination of how much of a particular good gets produced An examination of inflation An examination of consumer behavior An examination of where goods come from Which of the following can best be characterized as a subject of microeconomics? An examination of how much of a particular good gets produced An examination of inflation An examination of an economy’s overall level of production An examination of a country’s imports and exports ============================================== ECO 365T Assignment Week 1 Practice The Fundamentals of Economic Quiz (100% Correct) (June, 2019) FOR MORE CLASSES VISIT www.eco365mart.com ECO 365 Week 1 Practice The Fundamentals of Economic Quiz Complete the Week 1 The Fundamentals of Economics Quiz in McGraw-Hill Connect®. These are randomized questions. Note: You have unlimited attempts available to complete practice assignments. The highest scored attempt will be recorded. These assignments have

13. earlier due dates, so plan accordingly. Grades must be transferred manually to eCampus by your instructor. Don’t worry, this might happen after the due date. The opportunity cost of an action is always equal to: the next-best alternative for the resources used to undertake the action. the things you could have done instead of the action you chose to undertake. the time you give up to undertake the action. the money you give up to undertake the action. The fish in the ocean are what type of market resource? Land Capital Entrepreneurial ability Labor Which of the following scenarios most accurately reflects the concept of scarcity? The steak Henry did not buy because he is a vegetarian. The Smith Household produces an average of three bags of trash a week. Sienna enjoys viewing flowers in the city garden during her walk. Brett is a farmer with an open field on which he can plant either soybeans or corn. Bob, the owner of a local deli in town, needs to purchase something that economists would label as ―capital‖ to help him produce sandwiches. Which of the following is an example of capital? Ham for the sandwiches An additional worker A new idea that automates the making of sandwiches A meat slicer to cut ham for sandwiches In the circular flow model of the market system, households Multiple Choice buy products and resources. sell products and resources. buy products and sell resources. sell products and buy resources. Use the following graph of the market for milk to answer the question below. In this market, the equilibrium price is _______ and equilibrium quantity is _______. Multiple Choice $28 per gallon; 150 million gallons $1.00 per gallon; 35 million gallons $1.50 per gallon; 30 million gallons $1.50 per gallon; 28 million gallons Use the following graph to answer the question below. At a quantity of 130, marginal benefit equals ______ and marginal cost equals _____. Multiple Choice $1.60, $0.50 $1.00, $1.00 $0.50, $1.60 $1.60, $1.60 Use the following market data to answer the question below. Price per Unit Quantity Purchased by Consumer Quantity Sold by Producer $5 2,000 0 10 1,800 600 20 1,400 900 25 1,500 In the market shown in the table, the equilibrium quantity is Multiple Choice 900. 1,400. 1,600. 1,200. The problems of inflation and unemployment are Multiple Choice not relevant to the U.S. economy. major topics of microeconomics. major topics of 300 15 1,600 1,200 1,200 30 1,000

14. macroeconomics. only relevant to European economies. The circular flow model illustrates Multiple Choice how natural and other resources are created. how money is created by the banking system. the importance of having a central plan for the economy. the interdependence of businesses and consumers. The economizing problem is essentially one of deciding how to make the best use of Multiple Choice limited resources to satisfy limited economic wants. unlimited resources to satisfy limited economic wants. unlimited resources to satisfy unlimited economic wants. limited resources to satisfy unlimited economic wants. Microeconomics is concerned with Multiple Choice how government debt affects aggregate economic activity. a detailed examination of specific economic units that make up the economic system. the establishing of an overall view of the operation of the aggregate economic system. the aggregate or total levels of income, employment, and output. The basic truth that underlies the study of economics is the fact that we all face Multiple Choice taxes. risk. scarcity. death. Which of the following is not a main function of the entrepreneur? Multiple Choice to make routine pricing decisions to make strategic business decisions to assume the risk of economic losses to innovate The four factors of production (or types of resources) are Multiple Choice land, labor, capital, and entrepreneurial ability. land, labor, capital, and money. labor, capital, entrepreneurial ability, and money. labor, capital, technology, and entrepreneurial ability. Which of the following is a land resource? Multiple Choice a machine for detecting earthquakes natural gas an oil drilling rig a farmer The main function of the entrepreneur is to Multiple Choice create market demand. make routine pricing decisions. purchase capital. innovate. The table below represents the demand for bottles of sunscreen at Daytona Beach on a sunny June day. Demand for Sunscreen Price (dollars) Quantity of Sunscreen Demanded (bottles) $4 7,200 6 12 5,600 If the price of a bottle of sunscreen is $8, what will be the quantity demanded? 6,000 bottles 1,600 bottles 8,000 bottles 6,400 bottles Marcus budgets $120 a week for groceries. When the price of all food goes up by 10% he buys less salmon. This can best be explained by: diminishing marginal utility. the substitution effect. the income effect. a change in income. Which of the following scenarios 6,800 8 6,400 10 6,000

15. is an example of a person interacting outside of a market? Mark places his comic book collection up for sale on eBay. Young buys fresh radishes at the local farmers’ market. Melissa votes for her favorite performer at a local talent show. Isabella agrees to fix Miguel’s sink if Miguel paints Isabella’s porch. Tastes and preferences generally do not change for goods or services in markets. False True When economists speak of ―demand‖ in a particular market, they refer to Multiple Choice the whole demand curve or schedule. how much of an item buyers want to buy at a given price. one point on the demand curve. one price-quantity combination on the demand schedule. In understanding and analyzing ―demand,‖ we focus on how much of a product the buyers are Multiple Choice willing and able to buy at different prices. actually buying now and in the recent past at various prices. willing and wanting to buy at different prices. willing and able to buy with their given income. The most important purpose of a market is to Multiple Choice bring buyers and sellers together so they can trade. bring buyers and sellers together so they can argue. bring buyers and sellers together so they can barter. increase the sellers’ wealth. An increase in the demand for music downloads indicates that more music downloads are Multiple Choice demanded because sellers are selling more music downloads. demanded even if prices of music downloads stay the same. demanded because sellers are putting music downloads on sale. demanded because music download prices have decreased. All else held constant, an increase in the price of tablets will result in a Multiple Choice leftward shift of the demand curve for tablets. movement up and to the left along the demand curve for tablets. rightward shift of the demand curve for tablets. decrease in the demand for tablets. When economists say that the demand for a product has decreased, they mean that Multiple Choice the product has become more expensive and thus consumers are buying less of it. consumers are now willing and able to buy less of this product at each possible price. the demand curve has shifted to the right. the product has become particularly scarce for some reason. When the price of a product increases, consumers shift their purchases to other products whose prices are now relatively lower. This statement describes Multiple Choice the income effect. the rationing function of prices.

16. the substitution effect. an inferior good. Prices usually allocate resources efficiently because they allocate Multiple Choice consumption to the highest cost of good or service. consumption to the lowest value good or service. resources to the highest value good or service. resources to the lowest value good or service. If the price of Pepsi decreases, all else held constant, then we’d expect to see a consequent shift of the demand curve for Multiple Choice Coke to the left. Pepsi to the left. Pepsi to the right. Coke to the right. The horizontal axis of a graph that shows a market demand curve indicates the Multiple Choice different prices at which a product can be purchased. various quantities of a product at which the market will be cleared. quantities that consumers are willing and able to buy at various prices. number of consumers who are in the market for a product. All else held constant, the law of demand suggests that as Multiple Choice the price of tablets decreases, the quantity of tablets demanded will decrease. income increases, the quantity of tablets demanded will increase. the price of tablets decreases, the quantity of tablets demanded will increase. the demand for tablets increases, the price of tablets will increase. In moving along a demand curve, which of the following is not held constant? Multiple Choice price expectations the price of the product for which the demand curve is relevant people’s tastes and preferences consumer incomes Economists use the term ―demand‖ to refer to Multiple Choice a particular price-quantity combination on a stable demand curve. a schedule of various combinations of market prices and quantities demanded. anupsloping line on a graph that relates consumer purchases and product price. the total amount spent on a particular commodity over a fixed time period. Imagine that the market supply of peaches comes from Georgia (GA) and South Carolina (SC). The supply schedule below shows the quantity of peaches supplied in each state at each price. Individual and Market Supply of Peaches Quantity of Peaches Supplied (pounds) Price (dollars per pound) GA SC Market $10 20,000 18,000 15,000 31,000 31,000 6 12,000 24,000 4 8,000 9,000 17,000 17,000 2 4,000 10,000 10,000 Instructions: Enter your answers as a whole number. 1. In the table, complete the column labeled ―Market.‖ 1. 38,000 38,000 8 16,000 12,000 24,000 6,000

17. when the price is $6 per pound? 24,000 pounds Which of the following scenarios would likely shift the supply of cars to the left (decrease in supply)? Automobile workers become more productive. The price of cars decreases. The price of steel and aluminum increase. The price of automotive paint decreases. Use the figure below to answer the following question. An increase in price, all else held constant, would cause a change from Multiple Choice point 4 to point 5. point 5 to point 1. point 3 to point 4. point 1 to point 3. In order to derive the market supply curve from individual supply curves, we add up the Multiple Choice total number of sellers in the market at a given time. various quantities that individual sellers are willing and able to supply at different prices. costs that all individual sellers incur in producing the product. various prices that individual sellers are charging for the quantities of the product available. Use the figure below to answer the following question. The diagram shows three supply curves for apples. Which of the following would cause the supply of apples to shift from S1 to S3? Multiple Choice a decrease in the price of resources used to produce apples a decrease in the price of apples in the market a decrease in the number of apple farmers an increase in the number of apple farmers Use the figure below to answer the following question. 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 lower car prices in the future a decrease in the number of car producers an increase in the price of cars in the market expectations of higher car prices in the future Use the figure below to answer the following question. The figure shows three supply curves for wheat. Which of the following would cause the supply of wheat to shift from S1 to S2? Multiple Choice an increase in the price of water an increase in the price of wheat a new tax on wheat production a decrease in the price of water Use the figure below to answer the following question. The figure above shows three supply curves for wheat. Which of the following would cause the quantity of wheat supplied to increase from point a to point b? Multiple Choice a decrease in the price of wheat a subsidy for wheat production a tax on wheat production an increase in the price of wheat The vertical axis of a graph that shows a How many pounds of peaches will be supplied to the market

18. market supply curve indicates the Multiple Choice number of sellers who are in the market for this product. various quantities of output at which the market will be cleared. cost of the amount of output produced. prices at which firms would be willing and able to sell their different products. Use the figure below to answer the following question. The figure above shows three supply curves for wheat. Which of the following would cause the supply of wheat to shift from S1 to S2? Multiple Choice a subsidy for wheat production an increase in the price of wheat a decrease in the price of wheat a tax on wheat production Use the figure below to answer the following question. The figure above shows three supply curves for wheat. Which of the following would cause the supply of wheat to shift from S1 to S2? Multiple Choice a decrease in consumer incomes, assuming wheat is a normal good a change in consumer tastes away from wheat bread the development of a more effective insecticide against cutworms an increase in the price of fertilizer Use the figure below to answer the following question. 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 subsidy for wheat production a decrease in the price of wheat a tax on wheat production an increase in the price of wheat Use the figure below to answer the following question. The figure above shows three supply curves for wheat. Which of the following would cause the quantity of wheat supplied to decrease from point b to point a? Multiple Choice an increase in the price of wheat a tax on wheat production a decrease in the price of wheat a subsidy for wheat production In understanding and analyzing ―market supply,‖ we focus on how much all firms Multiple Choice have sold in the recent past at various prices. want to supply at a given price. are willing and able to supply at different prices. will supply in the future at various prices. All else being equal, if the price of a product decreases, we would expect Multiple Choice quantity supplied to decrease. supply to decrease. demand to increase. quantity supplied to increase. When economists say that the supply for a product has increased, they mean that the Multiple Choice product has become particularly scarce for some reason. supply curve has shifted to the left. product has become more expensive and thus consumers are buying less of it. supply curve has shifted to the right. Which of

19. the following can best be characterized as a subject of macroeconomics? An examination of how much of a particular good gets produced An examination of inflation An examination of consumer behavior An examination of where goods come from Which of the following can best be characterized as a subject of microeconomics? An examination of how much of a particular good gets produced An examination of inflation An examination of an economy’s overall level of production An examination of a country’s imports and exports ============================================== ECO 365T Assignment Week 2 Apply Market Dynamics and Efficiency Homework FOR MORE CLASSES VISIT www.eco365mart.com ECO 365 Assignment Week 2 Apply Market Dynamics and Efficiency Homework Note: You have only one attempt available to complete assignments. Grades must be transferred manually to eCampus by your instructor. Don’t worry, this might happen after the due date. The demand and supply schedules for sunscreen at a small beach are shown below. Market for Sunscreen Price (dollars per bottle) Quantity of Sunscreen Demanded (bottles) Quantity of Sunscreen Supplied (bottles) $35 1,000 7,000 25 3,000 5,500 20 4,000 2,500 10 6,000 1,000 Instructions: Enter your answers as a whole number. If the price is $15 per bottle, how many bottles of sunscreen are demanded and supplied? Qd = bottles Qs = bottles In this case, there would be upward pressure on the price. What is the equilibrium price and quantity in the market for sunscreen? P = Q = bottles The market for ice cream bars on a hot day at the local beach is summarized in the table below. Market for Ice Cream Bars Price 8,500 30 2,000 4,000 15 5,000

20. (dollars) Quantity of Ice Cream Bars Demanded Quantity of Ice Cream Bars Supplied $1.40 310 100 1.60 280 140 1.80 250 180 2.00 220 220 2.20 190 260 2.40 160 300 2.60 130 340 Instructions: Enter your answer as a whole number. Determine whether there is a surplus or a shortage at a price of $1.80 per ice cream bar, and determine the size of the surplus or shortage. There is a shortage in a market for a product when Multiple Choice the current price is lower than the equilibrium price. quantity demanded is lower than quantity supplied. demand is less than supply. supply is less than demand. Assume that the graphs show a competitive market for the product stated in the question. Select the graph above that best shows the change in the market for leather coats when leather coats become more fashionable among young consumers. Multiple Choice graph (1) graph (2) graph (3) graph (4) Use the following graph for the milk market to answer the question below. There would be excess production of milk whenever the price is Multiple Choice greater than $1.50 per gallon. greater but not less than $2.00 per gallon. less but not greater than $2.00 per gallon. less than $1.50 per gallon. There is a surplus in a market for a product when Multiple Choice quantity demanded is greater than quantity supplied. demand is less than supply. quantity demanded is less than quantity supplied. the current price is lower than the equilibrium price. Use the following graph for the milk market to answer the question below. In this market, the equilibrium price is ____ and equilibrium quantity is ___ Multiple Choice $1.50 per gallon; 30 million gallons. $1.50 per gallon; 28 million gallons. $1.00 per gallon; 35 million gallons. $28 per gallon; 150 million gallons. In competitive markets, a surplus or shortage will Multiple Choice cause changes in the quantities demanded and supplied that tend to intensify the surplus or shortage. cause changes in the quantities demanded and supplied that tend to eliminate the surplus or shortage. cause shifts in the demand and supply curves that tend to eliminate the surplus or shortage. never exist because the markets are always at equilibrium. Use the following table to answer the question below. Price per Unit Quantity Demanded per Year 2,000 0 10 1,800 300 15 1,400 900 25 1,200 Quantity Supplied per Year $5 1,600 1,200 30 1,000 600 20 1,500 In

21. this competitive market, the price and quantity will settle at Multiple Choice $25 and 1,200 units. $15 and 1,600 units. $10 and 1,800 units. $20 and 900 units. There is an excess demand in a market for a product when Multiple Choice quantity demanded is greater than quantity supplied. quantity demanded is less than quantity supplied. the current price is higher than the equilibrium price. supply is less than demand. The marginal benefit of an additional beach towel is $12. The marginal cost of producing an additional beach towel is $8. If producers are minimizing the average costs of production, then we can conclude: beach towel production is allocatively efficient but not productively efficient. beach towel production is neither allocatively nor productively efficient. beach towel production is both allocatively and productively efficient. beach towel production is not allocatively efficient but is productively efficient. The difference between the maximum price a consumer is willing to pay for a product and the actual price the consumer pays is called Multiple Choice utility. consumer demand. consumer surplus. market failure. Consumer surplus arises in a market because Multiple Choice at the current market price, quantity supplied is greater than quantity demanded. at the current market price, quantity demanded is greater than quantity supplied. the market price is below what some consumers are willing to pay for the product. the market price is higher than what some consumers are willing to pay for the product. If the equilibrium wage for fast-food restaurants is $8 and the government enforces a minimum wage of $15 Multiple Choice overall, society will be better off. workers will get paid less. fast-food restaurants will hire fewer workers. workers will be able to find more jobs. In the market for a particular pair of shoes, Jena is willing to pay $75 for a pair while Jane is willing to pay $85 for a pair. The actual price that each has to pay for a pair of shoes is $65. What is the combined amount of consumer surplus for Jena and Jane? Multiple Choice $215. $10. $130. $30. A producer’s minimum acceptable price for a particular unit of a good Multiple Choice will, for most units produced, equal the maximum that consumers are willing to pay for the good. must cover the wages, rent, and interest payments necessary to produce the good but need not include profit. is the same for all units of the good. equals the marginal cost of producing that particular unit. Charlie is

22. willing to pay $10 for a T-shirt that is priced at $9. If Charlie buys the T-shirt, then his consumer surplus is Multiple Choice $19. $0.90. $90. $1. Graphically, producer surplus is measured as the area Multiple Choice above the supply curve and above the actual price. above the supply curve and below the actual price. under the demand curve and below the actual price. under the demand curve and above the actual price. Productive efficiency occurs at the point where Multiple Choice marginal benefit exceeds marginal cost by the greatest amount. the production technique minimizes economic surplus. the production technique minimizes cost. consumer surplus exceeds producer surplus by the greatest amount. The market supply curve indicates the Multiple Choice total revenues that sellers would receive from selling various quantities of the product. total amount that buyers will pay in buying a given quantity of the product. maximum prices that buyers are willing and able to pay for the product. minimum acceptable prices that sellers are willing to accept for the product. Which of the following goods is both nonrival and nonexcludable? A hot dog at a hot dog stand A tuna in the ocean A soccer match in a stadium The light from a lighthouse at a harbor entrance Which of the following goods is nonrival? A soccer match in a stadium A visit to the doctor at her office A pizza at a pizza parlor A tuna in the ocean The production of paper often creates a waste product that pollutes waterways. Assume the producer of paper does not directly pay to dispose of the waste in the water. In this case, the price of paper will be the socially efficient price and the amount of paper produced will be the socially efficient amount. If one person’s consumption of a good does not preclude another’s consumption, the good is said to be Multiple Choice nonexcludable. rival in consumption. nonrival in consumption. excludable. If there are external benefits associated with the consumption of a good or service Multiple Choice the private demand curve will overestimate the true demand curve. consumers will be willing to pay for all these benefits in private markets. the market demand curve will be the vertical summation of the individual demand costs. the private demand curve will underestimate the true demand curve. If a good that generates negative externalities were priced to take these negative externalities into account, its Multiple Choice price would decrease, and its output would increase. price

23. would remain constant and output would increase. price would increase but its output would remain constant. price would increase, and its output would decrease. What are the two characteristics that differentiate private goods from public goods? Multiple Choice ownership and usage negative externality and positive externality rivalry and excludability marginal cost and marginal benefit A negative externality or spillover cost (additional social cost) occurs when Multiple Choice the price of the good exceeds the marginal cost of producing it. firms fail to achieve allocative efficiency. the total cost of producing a good exceeds the costs borne by the producer. firms fail to achieve productive efficiency. Where there are spillover (or external) benefits from having a particular product in a society, the government can make the quantity of the product approach the socially optimal level by doing the following except Multiple Choice providing the product itself. taxing the sellers of the product. subsidizing the buyers of the product. subsidizing the sellers of the product. If some activity creates external benefits as well as private benefits, then economic theory suggests that the activity ought to be Multiple Choice subsidized. prohibited. taxed. left alone. ============================================== ECO 365T Assignment Week 2 Practice Market Dynamics and Efficiency Quiz FOR MORE CLASSES VISIT www.eco365mart.com ECO 365 Assignment Week 2 Practice Market Dynamics and Efficiency Quiz Note: You have unlimited attempts available to complete practice assignments. The highest scored attempt will be recorded. These assignments have earlier due dates, so plan accordingly. Grades must be transferred manually to eCampus by your instructor. Don’t worry, this might happen after the due date.

24. The monthly demand and supply schedules for new cars at a large California dealership are shown in the table below. Market for New Cars Price (dollars) Quantity of Cars Demanded Quantity of Cars Supplied $30,000 0 250 25,000 200 200 15,000 300 175 10,000 dealership is currently charging $25,000 for a new car, at the end of the month there will be: a shortage of 125 cars. a surplus of 5,000 cars. a surplus of 125 cars. a shortage of 5,000 cars. neither a surplus nor a shortage; the market will be in equilibrium. The demand and supply schedules for sunscreen at a small beach are shown below. Market for Sunscreen Price (dollars per bottle) Sunscreen Demanded (bottles) Quantity of Sunscreen Supplied (bottles) $35 1,000 8,500 30 2,000 5,500 20 4,000 4,000 15 5,000 1,000 Instructions: Enter your answers as a whole number. If the price is $15 per bottle, how many bottles of sunscreen are demanded and supplied? Qd = Qs = In this case, there would be upward pressure on the price. What is the equilibrium price and quantity in the market for sunscreen? P = Q = Use the following graph for the milk market to answer the question below. There would be excess production of milk whenever the price is Multiple Choice greater than $1.50 per gallon. greater but not less than $2.00 per gallon. less than $1.50 per gallon. less but not greater than $2.00 per gallon. There is a surplus in a market for a product when Multiple Choice quantity demanded is less than quantity supplied. demand is less than supply. the current price is lower than the equilibrium price. quantity demanded is greater than quantity supplied. Use the following table to answer the question below. Price per Unit Quantity Demanded per Year Supplied per Year $5 2,000 0 10 1,800 600 20 1,400 900 25 1,500 There will be a shortage whenever the price is Multiple Choice equals $25. higher than $25. higher than $30. lower than $25. A decrease in demand and an increase in supply will Multiple Choice decrease price and affect the equilibrium quantity in an indeterminate way. decrease price and increase the equilibrium quantity. increase price and affect the equilibrium quantity in an indeterminate way. affect price in an indeterminate way and decrease the equilibrium 100 225 20,000 400 150 If the Quantity of 7,000 25 3,000 2,500 10 6,000 Quantity 300 15 1,200 30 1,000 1,600 1,200

25. quantity. There is an excess demand in a market for a product when Multiple Choice quantity demanded is greater than quantity supplied. supply is less than demand. the current price is higher than the equilibrium price. quantity demanded is less than quantity supplied. In competitive markets, surpluses or shortages will Multiple Choice cause shifts in the demand and supply curves that tend to eliminate the excess production or excess demand. cause changes in the quantities demanded and supplied that tend to intensify the excess production or excess demand. never exist because the markets are always at equilibrium. cause changes in the quantities demanded and supplied that tend to eliminate the excess production or excess demand. There is a shortage in a market for a product when Multiple Choice quantity demanded is lower than quantity supplied. supply is less than demand. demand is less than supply. the current price is lower than the equilibrium price. Which of the following is an example of a price ceiling? Multiple Choice Price supports for agricultural products. Subsidies for apartment rent in major cities. Limits on interest rates charged by credit card companies. Minimum- wage laws for unskilled workers. Assume that the graphs show a competitive market for the product stated in the question. Select the graph above that best shows the change in the market for leather coats when leather coats become more fashionable among young consumers. Multiple Choice graph (1) graph (4) graph (3) graph (2) In competitive markets, a surplus or shortage will Multiple Choice never exist because the markets are always at equilibrium. cause changes in the quantities demanded and supplied that tend to eliminate the surplus or shortage. cause changes in the quantities demanded and supplied that tend to intensify the surplus or shortage. cause shifts in the demand and supply curves that tend to eliminate the surplus or shortage. Use the following graph for the milk market to answer the question below. In this market, the equilibrium price is ____ and equilibrium quantity is ___ Multiple Choice $1.50 per gallon; 28 million gallons. $1.50 per gallon; 30 million gallons. $1.00 per gallon; 35 million gallons. $28 per gallon; 150 million gallons. Use the following table to answer the question below. Price per Unit Quantity Demanded per Year 2,000 0 10 1,800 300 15 Quantity Supplied per Year $5 1,600 600 20

26. competitive market, the price and quantity will settle at Multiple Choice $20 and 900 units. $25 and 1,200 units. $15 and 1,600 units. $10 and 1,800 units. The additional benefit of producing one more roast beef sandwich at a local deli is $2. The additional cost of producing one more roast beef sandwich is $3. To improve allocative efficiency: producers should produce at least one more roast beef sandwich because MB > MC. producers should produce at least one more roast beef sandwich because MC > MB. producers should not produce one more roast beef sandwich because MB > MC. producers should not produce one more roast beef sandwich because MC > MB. The value that consumers get (from consuming a product) over and above what they actually paid for the product is called Multiple Choice consumer surplus. consumer utility. consumption expenditures. consumer demand. Consumer surplus Multiple Choice is the difference between the maximum price consumers are willing to pay for a product and the lower equilibrium price. is the difference between the minimum price producers are willing to accept for a product and the higher equilibrium price. is the difference between the maximum price consumers are willing to pay for a product and the minimum price producers are willing to accept. rises as equilibrium price rises. Charlie is willing to pay $10 for a T-shirt that is priced at $9. If Charlie buys the T-shirt, then his consumer surplus is Multiple Choice $19. $1. $90. $0.90. If the equilibrium wage for fast-food restaurants is $8 and the government enforces a minimum wage of $15 Multiple Choice workers will be able to find more jobs. overall, society will be better off. workers will get paid less. fast-food restaurants will hire fewer workers. The market supply curve indicates the Multiple Choice total revenues that sellers would receive from selling various quantities of the product. minimum acceptable prices that sellers are willing to accept for the product. maximum prices that buyers are willing and able to pay for the product. total amount that buyers will pay in buying a given quantity of the product. Charlie is willing to pay $10 for a T-shirt that is priced at $9. If Charlie buys the T-shirt, then his consumer surplus is Multiple Choice $90. $1. $19. $0.90. Graphically, producer surplus is measured as the area Multiple Choice under the demand curve and below the actual 1,400 900 25 1,200 1,200 30 1,000 1,500 In this

27. price. above the supply curve and below the actual price. under the demand curve and above the actual price. above the supply curve and above the actual price. Allocative efficiency occurs only at that output where Multiple Choice the combined amounts of consumer surplus and producer surplus are maximized. consumer surplus exceeds producer surplus by the greatest amount. marginal benefit exceeds marginal cost by the greatest amount. the areas of consumer and producer surplus are equal. A producer’s minimum acceptable price for a particular unit of a good Multiple Choice must cover the wages, rent, and interest payments necessary to produce the good but need not include profit. equals the marginal cost of producing that particular unit. is the same for all units of the good. will, for most units produced, equal the maximum that consumers are willing to pay for the good. Productive efficiency occurs at the point where Multiple Choice the production technique minimizes economic surplus. the production technique minimizes cost. marginal benefit exceeds marginal cost by the greatest amount. consumer surplus exceeds producer surplus by the greatest amount. The minimum acceptable price for a product that producer Sam is willing to receive is $15. The price he could get for the product in the market is $18. How much is Sam’s producer surplus? Multiple Choice $45 $3 $270 $33 The difference between the maximum price a consumer is willing to pay for a product and the actual price the consumer pays is called Multiple Choice market failure. consumer surplus. consumer demand. utility. Consumer surplus arises in a market because Multiple Choice the market price is higher than what some consumers are willing to pay for the product. at the current market price, quantity supplied is greater than quantity demanded. at the current market price, quantity demanded is greater than quantity supplied. the market price is below what some consumers are willing to pay for the product. The difference between the actual price that a producer receives and the minimum acceptable price the producer is willing to accept is called the producer Multiple Choice revenues. surplus. costs. utility. In the market for a particular pair of shoes, Jena is willing to pay $75 for a pair while Jane is willing to pay $85 for a pair. The actual price that each has to pay for a pair of shoes is $65. What is the combined amount of consumer surplus for Jena and Jane? Multiple Choice

28. $130. $215. $30. $10. Producer surplus Multiple Choice is the difference between the maximum price consumers are willing to pay for a product and the lower equilibrium price. rises as equilibrium price falls. is the difference between the maximum price consumers are willing to pay for a product and the minimum price producers are willing to accept. is the difference between the minimum price producers are willing to accept for a product and the higher equilibrium price. The production of paper often creates a waste product that pollutes waterways. Assume the producer of paper does not directly pay to dispose of the waste in the water. In this case, the price of paper will be below the socially efficient price and the amount of paper produced will be above the socially efficient amount. Which of the following goods is nonrival? A visit to the doctor at her office A soccer match in a stadium A pizza at a pizza parlor A tuna in the ocean Which of the following goods is both nonrival and nonexcludable? A hot dog at a hot dog stand A soccer match in a stadium The light from a lighthouse at a harbor entrance A tuna in the ocean Texarkana Electric Company burns coal to heat the water that drives its electricity-producing turbines. The table below shows the marginal benefit of annual electricity consumption and the private marginal cost of annual electricity production. Marginal Cost and Marginal Benefit Quantity (millions of megawatts) MBprivate MCprivate MCexternal MCsocial 1.0 105 2.0 130 90 20 110 3.0 100 100 20 120 5.0 85 110 20 130 Instructions: Enter your answers as a whole number. What is the (apparent) optimal amount of electricity for Texarkana Electric Company to produce each year? 4 million megawatts per year Now assume the production of each million megawatts of electricity also produces sulfur dioxide (a precursor to acid rain). The external cost of the sulfur dioxide is $20 per million megawatts of electricity production. Fill in the external marginal cost (MCexternal) and the social marginal cost (MCsocial) columns in the table above. What is the socially optimal amount of electricity for Texarkana to produce if all costs and benefits are considered? 3 million megawatts per year If electricity production triggers an external cost of sulfur dioxide of $20 per million megawatts, these $145 $85 $ 20 $ 20 115 4.0 125 6.0 115 95 105 20 60

29. external costs need to be added to private marginal cost in order to measure social marginal cost. When Texarkana Electric Company produces 3.0 million megawatts per year, an optimum for society is reached because social marginal benefit equals social marginal cost. If some activity creates external benefits as well as private benefits, then economic theory suggests that the activity ought to be Multiple Choice left alone. taxed. prohibited. subsidized. Where there are spillover (or external) benefits from having a particular product in a society, the government can make the quantity of the product approach the socially optimal level by doing the following except Multiple Choice subsidizing the sellers of the product. providing the product itself. taxing the sellers of the product. subsidizing the buyers of the product. External benefits in consumption refer to benefits accruing to those Multiple Choice who are consuming the product abroad. who bought and consumed the product. who are selling the product to the consumers. other than the ones who consumed the product. When the production of a good generates external costs, a firm’s private supply curve will be Multiple Choice vertical. horizontal. to the left of the social supply curve. to the right of the social supply curve. A negative externality or spillover cost (additional social cost) occurs when Multiple Choice the price of the good exceeds the marginal cost of producing it. firms fail to achieve allocative efficiency. firms fail to achieve productive efficiency. the total cost of producing a good exceeds the costs borne by the producer. If there are external benefits associated with the consumption of a good or service Multiple Choice the private demand curve will overestimate the true demand curve. consumers will be willing to pay for all these benefits in private markets. the market demand curve will be the vertical summation of the individual demand costs. the private demand curve will underestimate the true demand curve. A public good Multiple Choice is available to all and cannot be denied to anyone. produces no positive or negative externalities. can be profitably produced by private firms. is characterized by rivalry and excludability. If a good that generates negative externalities were priced to take these negative externalities into account, its Multiple Choice price would remain constant and output would increase. price would increase, and its output would

30. decrease. price would decrease, and its output would increase. price would increase but its output would remain constant. Use the following supply and demand graph for product X to answer the question below. What would happen if the government taxed the producers of this product because it has negative externalities in production? Multiple Choice supply would decrease demand would decrease supply would increase price would decrease A positive externality or spillover benefit (additional social benefit) occurs when Multiple Choice a firm does not bear all of the costs of producing a good or service. product differentiation increases the variety of products available to consumers. firms earn positive economic profits. the benefits associated with a product exceed those that accrue for consumers. What are the two characteristics that differentiate private goods from public goods? Multiple Choice marginal cost and marginal benefit rivalry and excludability ownership and usage negative externality and positive externality A public good Multiple Choice can never be provided by a nongovernmental organization. generally results in substantial negative externalities. costs essentially nothing to produce and is thus provided by the government at a zero price. cannot be provided to one person without making it available to others as well. The two main characteristics of a public good are Multiple Choice production at constant marginal cost and rising demand. nonrivalry and large negative externalities. nonexcludability and production at rising marginal cost. nonrivalry and nonexcludability. If the consumption of a product or service involves external benefits, then the government can improve efficiency in the market by Multiple Choice imposing a ive tax to for an overallocation of resources. providing a subsidy to for an overallocation of resources. imposing a ive tax to for an underallocation of resources. providing a subsidy to for an underallocation of resources. If one person’s consumption of a good does not preclude another’s consumption, the good is said to be Multiple Choice excludable. nonrival in consumption. rival in consumption. nonexcludable. ============================================== ECO 365T Assignment Week 3 Apply: Elasticity and Consumer Choice Homework

31. FOR MORE CLASSES VISIT www.eco365mart.com ECO 365 Assignment Week 3 Apply: Elasticity and Consumer Choice Homework Review the Assignment Week 3 Elasticity and Consumer Choice Quiz in preparation for this assignment. Complete the Assignment Week 3 Elasticity and Consumer Choice Homework in McGraw-Hill Connect®. These are randomized questions. Note: You have only one attempt available to complete assignments. Grades must be transferred manually to eCampus by your instructor. Don’t worry, this might happen after the due date. Which of the following scenarios would lead to a decrease in the demand for labor at Stephanie’s earring shop? Labor productivity increases. The cost of capital (a substitute for labor) decreases. The price of earrings increases. The wage rate increases. Which of the following scenarios would lead to an increase in the demand for mixers at Henry’s bread bakery? The market price of mixers decreases. The productivity of mixers decreases. The wage rate of labor (a substitute for capital) decreases. The market price of bread increases. Henry bakes loaves of bread, which he sells for $4 each. He is considering purchasing additional mixers (capital) for his bakery. Each additional mixer has the productivity described below. Fill in the ―Marginal Product,‖ ―Total Revenue,‖ and ―Marginal Revenue Product‖ columns. Assume this is a perfectly competitive market. Instructions: Enter your answers as a whole number. Henry’s Bakery and Revenues Capital (mixers) Total Product (loaves of bread) Marginal Product (loaves of bread) Price (dollars) Total Revenue (dollars) Marginal Revenue Product (dollars) 0 0 — $4 $0 — 1 8 8 4 32 $ 32 2 20 12 4 80 48 3 28 8 4 112 32 4 34 6 4 136 24 5 38 4 4 152 16 6 40 2 4 160 8 7 41 1 4 164 4 The marginal revenue product schedule is rev: 06_21_2018 Multiple Choice upsloping. the same whether the firm is selling in a purely competitive or imperfectly competitive market. the firm’s resource demand schedule. the firm’s resource supply schedule. Marginal product is rev: 06_21_2018 Multiple Choice the output of

32. the least skilled worker. the amount an additional worker adds to the firm’s total output. the amount any given worker contributes to the firm’s total revenue. a worker’s output multiplied by the price at which each unit can be sold. The change in a firm’s total revenue that results from hiring an additional worker is measured by the rev: 06_21_2018 Multiple Choice marginal product. average revenue product. marginal revenue. marginal revenue product. Marginal revenue product measures the rev: 06_21_2018 Multiple Choice increase in total revenue resulting from the production of one more unit of a product. increase in total resource cost resulting from the hire of one extra unit of a resource. amount by which the extra production of one more worker increases a firm’s total revenue. decline in product price that a firm must accept to sell the extra output of one more worker. If the marginal revenue product (MRP) of labor is less than the wage rate rev: 06_21_2018 Multiple Choice more labor should be employed. the firm is making profits. the firm is incurring losses. less labor should be employed A profit-maximizing firm employs resources to the point where rev: 06_21_2018 Multiple Choice MRP = MRC. resource price equals product price. MRC = MP. MP = product price. The following is a total-product schedule for a resource. Assume that the quantities of other resources the firm employs remain constant. Units of Resource Total Product 1 24 2 42 3 54 4 64 5 72 If the firm’s product sells for a constant $2 and the price of the resource is a constant $16, the firm will employ how many units of the resource? rev: 06_21_2018 Multiple Choice 2 3 4 5 Marginal resource cost is rev: 06_21_2018 Multiple Choice the increase in total resource cost associated with the production of one more unit of output. total resource cost divided by the number of inputs employed. the change in total revenue associated with the employment of one more unit of the resource. the increase in total resource cost associated with the hire of one more unit of the resource. Daphne has received job offers in six different cities across the United States. The table below shows the nominal wage she is being offered in each city and the average monthly rent for an apartment in each city. Calculate Daphne’s real wage in terms of how many months of rent her wage could purchase in each city and complete the ―Real Wage‖ column in the table below. Instructions:

33. Enter your answers rounded to the nearest whole number. Daphne’s Nominal and Real Wages City Nominal Salary (dollars) Monthly Rent (dollars) Real Wage (months of rent) Atlanta $50,000 $1,200 42 ± 1% Austin 50,500 1,368 37 ± 1% Chicago 65,000 1,920 34 ± 1% Lincoln 45,000 840 54 ± 1% Madison 48,000 1,164 41 ± 1% New York 95,000 3,204 30 ± 1% In which city is the nominal wage highest? New York In which city is the real wage highest? Lincoln Which of the following scenarios would result in an increase in the wage rate of solar panel installers and a decrease in the quantity of solar panel installers employed in Billy’s town? A decrease in people’s income decreases the demand for solar panels. A solar panel company shuts down in another town and solar panel installers try to find jobs in Billy’s town. Wages of solar panel installers increase in another town and attract workers away from Billy’s town. An increase in the demand for solar panels raises the price of each installation. The marginal revenue product of an input tends to decrease as rev: 06_13_2018 Multiple Choice more of the input is used. productivity increases. the price of the input decreases. the price of output increases. Rising wages can be explained by which of the following? rev: 06_13_2018 Multiple Choice Labor demand increases more rapidly than labor supply. Labor supply is highly sensitive to changes in labor productivity. Labor supply increases more rapidly than labor demand. Labor demand is stable and predictable. Suppose two workers can harvest $46 and three workers can harvest $60 worth of apples per day. On the basis of this information we can say that the rev: 06_13_2018 Multiple Choice marginal revenue product of each of the first two workers is $23. marginal revenue product of the third worker is $14. marginal product of each of the first two workers is 23. third worker should not be hired. A characteristic of a competitive labor market is rev: 06_13_2018 Multiple Choice an overall reduction in employment due to firms having market power. an equilibrium wage and quantity supplied. high levels of unemployment. labor supply changing as the wage changes. Labor productivity and the price of the good being produced are two variables that contribute to rev: 06_13_2018 Multiple Choice the demand for the product. the wage rate. the marginal product. whether or not a union forms. As the real wage decreases, the quantity of labor demanded ______ and the

34. quantity of labor supplied _______. rev: 06_13_2018 Multiple Choice increases; decreases decreases; increases increases; increases decreases; decreases An inclusive union rev: 06_13_2018 Multiple Choice organizes a wide range of workers in an industry to gain bargaining power. is most effective in a purely competitive industry. restricts supply of labor through licensing requirements. is most concerned with increasing the demand for workers in an industry. The supply curve for labor in a purely competitive market slopes upward because rev: 06_13_2018 Multiple Choice higher wages must be paid to bid workers away from other opportunities. marginal resource cost rises as productivity increases. the marginal product of labor falls as output increases. the wage rate paid to workers falls as more are hired. Compared to a competitive labor market, workers participating in an inclusive union will enjoy rev: 06_13_2018 Multiple Choice higher wages and more workers employed. higher wages and fewer workers employed. similar outcomes with respect to pay and employment. lower pay and more workers employed. The concept of ―wages‖ does not include which of the following items? rev: 06_13_2018 Multiple Choice money spent by workers direct money payments, like salaries and commissions bonuses and royalties earned fringe benefits, like health insurance and paid leave Use the following graph (where L is the quantity of labor) to answer the next question. It shows a firm that buys its inputs and sells its output in competitive markets. If the firm develops a new technology that increases labor productivity, the equilibrium level of employment for this firm is expected to be rev: 06_13_2018 Multiple Choice lower than L0. L0. zero. higher than L0. The individual firm that hires labor under competitive conditions faces a labor supply curve that rev: 06_13_2018 Multiple Choice is horizontal, because individual firms have no control over wages. slopes upward to the right. is vertical, because workers need a job at any wage. slopes downward to the right. In a purely competitive labor market, a profit-maximizing firm will hire labor up to the point where the marginal revenue product of labor equals the rev: 06_13_2018 Multiple Choice marginal cost of one extra unit of output. price of the product. average cost of each unit of output. wage rate, or the price of labor. For each of the following scenarios, determine which benefit of international trade applies: lower-priced goods, increased variety of

35. products, or access to scarce resources. Today most television sets bought in the United Stated are made in China; however, this was not the case twenty years ago. In large grocery stores in the United States, consumers can buy noodles from Asia, soups from France, pickled herring from Scandinavia, and beer from Germany. The United States has become a prime location for producers of semiconductors, whose products are then exported to nations around the world. This choice to produce in the United States is largely due to the access to the high- skilled workforce that is required for this type of production. While many developed nations have at least one domestic car manufacturer, consumers in these nations also have access to cars produced in other nations. The United States has long been the world’s largest exporter of wheat. The access to vast, fertile, and highly productive soil combined with high-technology farming practices have made the United States a very cost-efficient producer of agricultural goods. In economics, goods, services, or resources produced domestically and sold abroad are known as: imports. net exports. exports. international trade. Domestic producers might oppose free trade agreements because rev: 06_20_2018 Multiple Choice there could be a decrease in consumer surplus. there could be an increase in consumer surplus. there could be a decrease in producer surplus. there could be an increase in producer surplus. The principal concept behind comparative advantage is that a nation should rev: 06_20_2018 Multiple Choice concentrate production on those products for which it has the lowest domestic opportunity cost. strive to be self-sufficient in the production of essential goods and services. maximize its volume of trade with other nations. use tariffs and quotas to protect the production of vital products for the nation. Use the following table for a certain product’s market in Marketopia to answer the next question. Quantity Demanded Domestically Price Quantity Supplied Domestically 1,400 $10 2,200 1,600 9 2,000 1,800 8 1,800 2,000 7 1,600 2,200 6 1,400 2,400 5 1,200 If Marketopia is entirely closed to international trade, the equilibrium price and quantity would be rev: 06_20_2018 Multiple Choice $6 and 1,400 units. $9 and 2,000 units. $7 and 2,000 units. $8 and 1,800 units. Benefits from international trade are not based on differences in rev: 06_20_2018 Multiple Choice resource availability. technological capabilities. product

36. quality and other attributes. income levels. Limits on the quantity or total value of specific products imported to a nation are rev: 06_20_2018 Multiple Choice import quotas. nontariff barriers. protective tariffs. export subsidies. Governments often intervene in international trade and impose quotas to rev: 06_20_2018 Multiple Choice improve the performance of multinational corporations. shift a nation’s production possibilities frontier. increase revenues from export subsidies. protect domestic industries from foreign competition. An import quota on a product reduces the quantity of the product imported and rev: 06_20_2018 Multiple Choice will not affect the price of the product to the consumers. increases the total quantity of the product consumed. decreases the price of the product to the consumers. increases the price of the product to the consumers. Tariffs rev: 06_20_2018 Multiple Choice are excise taxes on goods exported abroad. are per-unit subsidies designed to promote exports. may be imposed either to raise revenue or to shield domestic producers from foreign competition. are also called import quotas. The slopes of the production possibilities curves for two nations reflect the rev: 06_20_2018 Multiple Choice relative prices of the resources in the two nations. average income levels in the two nations. amounts of imports and exports of the two nations. opportunity costs of production in the two nations. If a nation imposes a tariff on an imported product, then that nation will experience a(n) rev: 06_20_2018 Multiple Choice decrease in quantity supplied and an increase in the price of the product. decrease in demand and a decrease in the price of the product. decrease in the supply of, and an increase in the quantity demanded of, the product. increase in the quantity supplied of, and a decrease in the price of the product. A tariff is a rev: 06_20_2018 Multiple Choice quantity limit. tax. price ceiling. subsidy. A tax imposed by the U.S. government on imported Chinese frozen shrimp would be an example of rev: 06_20_2018 Multiple Choice a voluntary restriction. a regulatory trade restriction. a tariff. a quota. A maximum limit set on the amount of a specific good that may be imported into a country over a given period of time is called a rev: 06_20_2018 Multiple Choice voluntary export restriction. tariff. quota. nontariff barrier. When a nation removes tariffs on imported products that nation will rev: 06_20_2018

37. Multiple Choice experience lower prices and consume lower quantities. experience higher prices and consume lower quantities. experience higher prices and consume higher quantities. experience lower prices and consume higher quantities. The ratio at which nations will exchange one product for another is known as the rev: 06_20_2018 Multiple Choice exchange rate. discount rate. terms of trade. balance of trade. The higher price of imported products due to trade barriers causes some consumers to shift their purchases to a domestically produced product that is now rev: 06_20_2018 Multiple Choice higher in price because import competition has risen. higher in price because import competition has declined. lower in price because import competition has declined. lower in price because import competition has risen. The use of tariffs and quotas for trade protection results in rev: 06_20_2018 Multiple Choice less rent- seeking activity. lower prices for domestic consumers. less efficiency in the economy. less revenue for the government. When a nation removes restrictions on imported products that nation will rev: 06_20_2018 Multiple Choice experience higher prices and consume lower quantities. experience lower prices and consume lower quantities. experience lower prices and consume higher quantities. experience higher prices and consume higher quantities. The benefit of saving some American jobs in specific industries protected from foreign competition rev: 06_20_2018 Multiple Choice is much greater than the costs to the whole American economy. has risen in recent years. is much less than the costs to the whole American economy. has fallen in recent years. Assume that a tariff is imposed on an imported product. The difference between the domestic price and the world price is captured by rev: 06_20_2018 Multiple Choice the government. domestic producers. foreign exporters. domestic consumers. Refer to the production possibility curve for Marketopia below. The graph indicates that with the resources and technology it has available, Marketopia rev: 06_20_2018 Multiple Choice can produce either 40 units of rye or 20 units of eggs. cannot produce both 20 units of rye and 5 units of eggs. cannot produce both 20 units of rye and 10 units of eggs. can produce both 40 units of rye and 20 units of eggs. Elasticity differs from the slope as a measure of responsiveness to changes in prices because: elasticity is only useful

38. for describing demand, but the slope is useful for describing demand and supply. the slope is always negative, while elasticity is not. percentage changes do not depend on the units of measurement, whereas the slope does. elasticity changes depending on the currency prices are measured in, but this does not affect the slope. For which of the following products is demand likely to be the most elastic? All shoes Converse All Star sneakers All gym shoes All clothing items A 10% decrease in the price of gas grills leads to a 15% increase in the demand for flank steaks. The cross-price elasticity of demand between gas grills and flank steaks is: -1.5. 1.5. 15.0. -15.0. If nicotine in cigarettes is highly addictive, why would it make economic sense for producers of cigarettes to offer free samples of their products to young adults? The free samples will make demand more elastic in the long run. The free samples will teach young adults there is such a thing as a free lunch. The free samples will help get people addicted to nicotine, which makes demand less elastic. The free samples will make supply less elastic so people know there will be cigarettes. Generic macaroni and cheese is an inferior good. Demand for generic macaroni and cheese is likely to increase when: income decreases. the price of generic macaroni and cheese decreases. the price of generic macaroni and cheese increases. the price of premium macaroni and cheese decreases. Use the figure below to answer the following question. For which graph is the supply perfectly inelastic? rev: 05_14_2018 Multiple Choice graph 2 graph 3 graph 4 To economists, the main differences between ―the short run‖ and ―the long run‖ are that rev: 05_14_2018 Multiple Choice the law of diminishing returns applies in the long run, but not in the short run. fixed inputs are more important to decision making in the long run than they are in the short run. in the long run all resources are variable, while in the short run at least one resource is fixed. in the short run all resources are fixed, while in the long run all resources are variable. The cross-price elasticity of demand measures how sensitive purchases of a specific product are to changes in rev: 05_14_2018 Multiple Choice the general price level. the price of some other product. income. the price of that same product. When interpreting the Ed value as either elastic or inelastic, we look at the rev: 05_14_2018 Multiple Choice percent change in price. Ed coefficient with its negative sign. absolute value

39. of the Ed coefficient (dropping the negative sign). percent change in quantity. Answer the next question based on information in the following table. Product Percentage Change in Income Percentage Change in Quantity Demanded W −1 −1 X +6 +3 Y −1 +1 Z +4 +8 Which product would be an inferior good? rev: 05_14_2018 Multiple Choice product X product W product Z product Y Total revenue decreases as the price of a good increases, if the demand for the good is rev: 05_14_2018 Multiple Choice unitary elastic. inelastic. perfectly elastic. elastic. Which of the following factors will make the demand for a product relatively elastic? rev: 05_14_2018 Multiple Choice Purchases of the good require a small portion of consumers’ budgets. The good is considered a necessity. The time interval considered is long. There are few substitutes. The price elasticity of demand increases with the length of the period considered because rev: 05_14_2018 Multiple Choice consumers will be better able to find substitutes. consumers’ incomes will increase over time. all prices will increase over time. the demand curve will shift outward as time passes. If the absolute value of the price elasticity of demand for a good is .75, the demand for that good is described as rev: 05_14_2018 Multiple Choice normal. inelastic. inferior. elastic. The formula for the cross-price elasticity of demand is percentage change in rev: 05_14_2018 Multiple Choice price of B/percentage change in quantity demanded of A. quantity demanded of B/percentage change in price of B. quantity demanded of B/percentage change in price of A. quantity demanded of B/percentage change in income. For a linear demand curve rev: 05_14_2018 Multiple Choice demand is elastic at high prices. elasticity is constant along the curve. elasticity is unity at every point on the curve. demand is elastic at low prices. Hector would like to buy a new pair of soccer cleats. Hector prefers Adidas to Puma brand soccer cleats. But Hector chooses to buy the Puma brand cleats instead. Which of the following reasons for Hector’s choice is consistent with rational consumer choice? The price of Adidas brand soccer cleats was less than the price of Puma brand soccer cleats. Hector could not afford to buy both pairs of soccer cleats. The price of Puma brand soccer cleats was less than the price of Adidas brand soccer cleats. Hector did not know his preferences between the two brands of soccer cleats. Which of the following

40. defines marginal utility? rev: 04_09_2018 Multiple Choice the maximum amount of satisfaction or happiness derived from consuming a product the additional satisfaction or happiness received from the consumption of an additional unit of a good or service the total satisfaction or happiness received from the consumption of a good, service, or combination of goods and services the change in total utility divided by the price of a product The elasticity of demand for a product is likely to be greater rev: 05_14_2018 Multiple Choice the smaller the number of substitute products available. the greater the amount of time over which buyers adjust to a price change. if the product is a necessity, rather than a luxury good. the smaller the proportion of one’s income spent on the product. The price elasticity of supply measures how rev: 05_14_2018 Multiple Choice responsive the quantity supplied of X is to changes in the price of X. easily labor and capital can be substituted for one another in the production process. responsive the quantity supplied of Y is to changes in the price of X. responsive quantity supplied is to a change in incomes. The decision-making process followed by consumers to maximize utility assumes that rev: 04_09_2018 Multiple Choice consumers are unable to rank their preferences. consumers have unlimited incomes. consumers do not know how much marginal utility they obtain from consuming additional units of various products. consumers behave rationally, attempting to maximize their satisfaction. Total utility is best defined as the rev: 04_09_2018 Multiple Choice change in marginal utility multiplied by the price of a product. additional satisfaction received from consuming an additional unit of a good or service. maximum amount of satisfaction from consuming a product. total satisfaction received from consuming a good, service, or combination of goods and services. Marginal utility is equal to rev: 04_09_2018 Multiple Choice total utility divided by quantity consumed. total utility multiplied by quantity consumed. change in total utility divided by change in quantity consumed. change in total utility multiplied by change in quantity consumed. The price elasticity of supply for a product will be 2 if a rev: 05_14_2018 Multiple Choice 2% decrease in price causes a 1% decrease in quantity supplied. 1% decrease in price causes a 2% decrease in quantity supplied. 2% decrease in price causes a 2% decrease in quantity

41. supplied. 1% decrease in price causes a 0.2% decrease in quantity supplied. Use the following graph to answer the question below. If the price is P3, then the total revenue is represented by area rev: 05_14_2018 Multiple Choice B + C + D. B + C + D + E + F + G. A + B + C + D + E + F + G. E + F + G. The diagram concerns supply adjustments to an increase in demand (D1 to D2) in the immediate period, the short run, and the long run. Supply curves S1, S2, and S3 apply to the rev: 05_14_2018 Multiple Choice immediate period, long run, and short run respectively. immediate period, short run, and long run respectively. long run, short run, and immediate period respectively. short run, long run, and immediate period respectively. The demand schedules for such products as eggs, bread, and electricity tend to be rev: 05_14_2018 Multiple Choice perfectly elastic. relatively inelastic. unit-elastic. relatively elastic. The total revenue received by sellers of a good is computed by rev: 05_14_2018 Multiple Choice dividing the percentage change in quantity by the percentage change in price. multiplying the percentage change in price times the percentage change in quantity. adding the price and the quantity sold. multiplying the price times the quantity sold. The utility of a good or service rev: 04_09_2018 Multiple Choice rarely varies from person to person. is the satisfaction or happiness one receives from consuming it. is synonymous with usefulness. is easy to quantify. The utility from a specific product is rev: 04_09_2018 Multiple Choice determined by a consumer’s income. determined by the price of the product. constant as one consumes more units of it. a measure of one’s preference or taste for it. Which of the following is not an assumption of the decision- making process followed by consumers to maximize utility? rev: 04_09_2018 Multiple Choice The consumer does not consider the prices of the products. The consumer can rank his preferences. The consumer behaves rationally. The consumer has a limited income. Which of the following is an assumption of the decision-making process followed by consumers to maximize utility? rev: 04_09_2018 Multiple Choice The consumer oftentimes is not sure about her preferences. The consumer considers the prices of the products The consumer’s income increases as prices of goods increase. Marginal utility always increases as more units of a good are consumed. Which

42. of the following statements is correct? rev: 04_09_2018 Multiple Choice Total utility is the change in marginal utility as quantity consumed increases. Total utility is the product of multiplying price times marginal utility. Total utility is the sum of marginal utilities. Marginal utility is the sum of total utility. The satisfaction or happiness one gets from consuming a good or service is called rev: 04_09_2018 Multiple Choice income. profits. utility. price. In deciding what to buy to maximize utility, the consumer should choose the good with the rev: 04_09_2018 Multiple Choice lowest price. highest marginal utility per dollar spent. lowest marginal utility per dollar spent. highest marginal utility. The table below represents how Marco feels about chocolate candy bars. Fill in the missing values for total utility and marginal utility. Instructions: Enter your answers as a whole number. Chocolate Candy Bars and Marco’s Utility Chocolate Candy Bars Total Utility (utils) Marginal Utility (utils) 0 0 — 1 25 25 2 42 17 3 54 12 4 62 8 5 66 4 6 65 –1 Suppose Marco currently has two candy bars. You tell Marco you will give him either a soda, which gives him 22 utils of happiness, or two additional candy bars. Which is he likely to prefer? If an increase in the price of pineapple juice of 10% results in an increase in the demand for grape juice of 5%, the cross-price elasticity of demand between pineapple juice and grape juice is: -0.5. -5.0. 5.0. 0.5. Which of the following scenarios is likely to make the supply of Maine lobsters more elastic? The prices of butter, potatoes, and lobster bibs decrease. Time passes to allow lobstermen to adjust to market conditions. The price of lobster increases by $2 per pound. Lobster locating technologies improve. An economist recently estimated that for every 1% increase in the price of french fries at fast-food restaurants, 0.44% fewer french fries are sold. This indicates that the demand for fast-food french fries is: inelastic. elastic. perfectly inelastic. unit-elastic. Generally, we calculate elasticity as the: percentage change in quantity demanded/supplied divided by the percentage change in price. percentage change in quantity demanded/supplied divided by the change in price. percentage change in price divided by the percentage change in quantity demanded/supplied. change in quantity demanded/supplied divided by the change in price. The table below presents four supply curves for the same product at four different time

43. horizons. Supply in Four Time Horizons Price (dollars) Quantity Supplied in Horizon A Quantity Supplied in Horizon B Quantity Supplied in Horizon C Quantity Supplied in Horizon D $100 100 25 46 62.5 80 75 25 39 50.0 60 50 25 32 37.5 40 25 25 25 25.0 20 0 25 18 12.5 0 0 25 11 0.0 Which of the four time horizons is most likely to represent the firm’s long-run supply curve? Horizon A Horizon B Horizon C Horizon D Use the figure below to answer the following question. Which graph shows the immediate period for supply? rev: 05_14_2018 Multiple Choice graph 1 graph 3 graph 2 graph 4 Tom likes to collect Batman and Superman comic books. The table below presents his total and marginal utilities for both types of comic books. Instructions: Enter your answers as a whole number. Batman Comics, Superman Comics, and Tom’s Utility Batman Comic Books Superman Comic Books Quantity Total Utility Marginal Utility Quantity Total Utility Marginal Utility 0 0 — 0 0 — 1 40 40 1 58 58 2 68 28 2 92 34 3 88 20 3 106 14 4 94 6 4 110 4 5 94 0 5 112 2 6 84 – 10 6 112 0 7 64 –20 7 104 –8 Assume the price of a Batman comic book is $1, and the price of a Superman comic book is $2. Fill in the values for the marginal utility per dollar for Batman and Superman comic books in the table below. Batman Comics, Superman Comics, and Tom’s Marginal Utility per Dollar Batman Comic Books Superman Comic Books Quantity Marginal Utility per Dollar Quantity Marginal Utility per Dollar 0 — 0 — 1 40 1 29 2 28 2 17 3 20 3 7 4 6 4 2 5 0 5 1 6 -10 6 0 7 -20 7 -4 Suppose Tom has $5 to spend on Batman and Superman comic books (nothing else matters to Tom). If Tom wants to maximize his utility, how many of each should he buy? Now suppose Tom has $10 to spend on Batman and Superman comic books (nothing else matters to Tom). If Tom wants to maximize his utility, how many of each should he buy? ============================================== ECO 365T Assignment Week 3 Practice Elasticity and Consumer Choice Quiz FOR MORE CLASSES VISIT

44. www.eco365mart.com ECO 365 Assignment Week 3 Practice: Elasticity and Consumer Choice Quiz Note: You have unlimited attempts available to complete practice assignments. The highest scored attempt will be recorded. These assignments have earlier due dates, so plan accordingly. Grades must be transferred manually to eCampus by your instructor. Don’t worry, this might happen after the due date. Which of the following scenarios would lead to a decrease in the demand for labor at Stephanie’s earring shop? Labor productivity increases. The cost of capital (a substitute for labor) decreases. The price of earrings increases. The wage rate increases. Which of the following scenarios would lead to an increase in the demand for mixers at Henry’s bread bakery? The market price of mixers decreases. The productivity of mixers decreases. The wage rate of labor (a substitute for capital) decreases. The market price of bread increases. Henry bakes loaves of bread, which he sells for $4 each. He is considering purchasing additional mixers (capital) for his bakery. Each additional mixer has the productivity described below. Fill in the ―Marginal Product,‖ ―Total Revenue,‖ and ―Marginal Revenue Product‖ columns. Assume this is a perfectly competitive market. Instructions: Enter your answers as a whole number. Henry’s Bakery and Revenues Capital (mixers) Total Product (loaves of bread) Marginal Product (loaves of bread) Price (dollars) Total Revenue (dollars) Marginal Revenue Product (dollars) 0 0 — $4 $0 — 1 8 8 4 32 $ 32 2 20 12 4 80 48 3 28 8 4 112 32 4 34 6 4 136 24 5 38 4 4 152 16 6 40 2 4 160 8 7 41 1 4 164 4 The marginal revenue product schedule is Multiple Choice upsloping. the same whether the firm is selling in a purely competitive or imperfectly competitive market. the firm’s resource demand schedule. the firm’s resource supply schedule. Marginal product is Multiple Choice the output of the least skilled worker. the amount an additional worker adds to the firm’s total output. the amount any given worker contributes to the firm’s total revenue. a worker’s output multiplied by the price at which each unit can be sold. The change in a firm’s total revenue that results from hiring an additional worker is measured by the Multiple Choice marginal product. average revenue product. marginal revenue. marginal

45. revenue product. Marginal revenue product measures the Multiple Choice increase in total revenue resulting from the production of one more unit of a product. increase in total resource cost resulting from the hire of one extra unit of a resource. amount by which the extra production of one more worker increases a firm’s total revenue. decline in product price that a firm must accept to sell the extra output of one more worker. If the marginal revenue product (MRP) of labor is less than the wage rate Multiple Choice more labor should be employed. the firm is making profits. the firm is incurring losses. less labor should be employed A profit-maximizing firm employs resources to the point where Multiple Choice MRP = MRC. resource price equals product price. MRC = MP. MP = product price. The following is a total-product schedule for a resource. Assume that the quantities of other resources the firm employs remain constant. Units of Resource Total Product 1 24 2 42 3 54 4 64 5 72 If the firm’s product sells for a constant $2 and the price of the resource is a constant $16, the firm will employ how many units of the resource? Multiple Choice 2 3 4 5 Marginal resource cost is Multiple Choice the increase in total resource cost associated with the production of one more unit of output. total resource cost divided by the number of inputs employed. the change in total revenue associated with the employment of one more unit of the resource. the increase in total resource cost associated with the hire of one more unit of the resource. Daphne has received job offers in six different cities across the United States. The table below shows the nominal wage she is being offered in each city and the average monthly rent for an apartment in each city. Calculate Daphne’s real wage in terms of how many months of rent her wage could purchase in each city and complete the ―Real Wage‖ column in the table below. Instructions: Enter your answers rounded to the nearest whole number. Daphne’s Nominal and Real Wages City Nominal Salary (dollars) Monthly Rent (dollars) Real Wage (months of rent) Atlanta $50,000 $1,200 42 ± 1% Austin 50,500 1,368 37 ± 1% Chicago 65,000 1,920 34 ± 1% Lincoln 45,000 840 54 ± 1% Madison 48,000 1,164 41 ± 1% New York 95,000 3,204 30 ± 1% In which city is the nominal wage highest? In which city is the real wage highest? Which of the following scenarios would result in an increase in the wage rate of

46. solar panel installers and a decrease in the quantity of solar panel installers employed in Billy’s town? A decrease in people’s income decreases the demand for solar panels. A solar panel company shuts down in another town and solar panel installers try to find jobs in Billy’s town. Wages of solar panel installers increase in another town and attract workers away from Billy’s town. An increase in the demand for solar panels raises the price of each installation. The marginal revenue product of an input tends to decrease as Multiple Choice more of the input is used. productivity increases. the price of the input decreases. the price of output increases. Rising wages can be explained by which of the following? Multiple Choice Labor demand increases more rapidly than labor supply. Labor supply is highly sensitive to changes in labor productivity. Labor supply increases more rapidly than labor demand. Labor demand is stable and predictable. Suppose two workers can harvest $46 and three workers can harvest $60 worth of apples per day. On the basis of this information we can say that the Multiple Choice marginal revenue product of each of the first two workers is $23. marginal revenue product of the third worker is $14. marginal product of each of the first two workers is 23. third worker should not be hired. A characteristic of a competitive labor market is Multiple Choice an overall reduction in employment due to firms having market power. an equilibrium wage and quantity supplied. high levels of unemployment. labor supply changing as the wage changes. Labor productivity and the price of the good being produced are two variables that contribute to Multiple Choice the demand for the product. the wage rate. the marginal product. whether or not a union forms. As the real wage decreases, the quantity of labor demanded ______ and the quantity of labor supplied _______. Multiple Choice increases; decreases decreases; increases increases; increases decreases; decreases An inclusive union Multiple Choice organizes a wide range of workers in an industry to gain bargaining power. is most effective in a purely competitive industry. restricts supply of labor through licensing requirements. is most concerned with increasing the demand for workers in an industry. The supply curve for labor in a purely competitive market slopes upward because Multiple Choice higher wages must be paid to bid workers away from

47. other opportunities. marginal resource cost rises as productivity increases. the marginal product of labor falls as output increases. the wage rate paid to workers falls as more are hired. Compared to a competitive labor market, workers participating in an inclusive union will enjoy Multiple Choice higher wages and more workers employed. higher wages and fewer workers employed. similar outcomes with respect to pay and employment. lower pay and more workers employed. The concept of ―wages‖ does not include which of the following items? Multiple Choice money spent by workers direct money payments, like salaries and commissions bonuses and royalties earned fringe benefits, like health insurance and paid leave Use the following graph (where L is the quantity of labor) to answer the next question. It shows a firm that buys its inputs and sells its output in competitive markets. If the firm develops a new technology that increases labor productivity, the equilibrium level of employment for this firm is expected to be Multiple Choice lower than L0. L0. zero. higher than L0. The individual firm that hires labor under competitive conditions faces a labor supply curve that Multiple Choice is horizontal, because individual firms have no control over wages. slopes upward to the right. is vertical, because workers need a job at any wage. slopes downward to the right. In a purely competitive labor market, a profit-maximizing firm will hire labor up to the point where the marginal revenue product of labor equals the Multiple Choice marginal cost of one extra unit of output. price of the product. average cost of each unit of output. wage rate, or the price of labor. For each of the following scenarios, determine which benefit of international trade applies: lower-priced goods, increased variety of products, or access to scarce resources. Today most television sets bought in the United Stated are made in China; however, this was not the case twenty years ago. In large grocery stores in the United States, consumers can buy noodles from Asia, soups from France, pickled herring from Scandinavia, and beer from Germany. The United States has become a prime location for producers of semiconductors, whose products are then exported to nations around the world. This choice to produce in the United States is largely due to the access to the high- skilled workforce that is required for this type of production. While many developed nations have at least one domestic car manufacturer,

48. consumers in these nations also have access to cars produced in other nations. The United States has long been the world’s largest exporter of wheat. The access to vast, fertile, and highly productive soil combined with high-technology farming practices have made the United States a very cost-efficient producer of agricultural goods. In economics, goods, services, or resources produced domestically and sold abroad are known as: imports. net exports. exports. international trade. Domestic producers might oppose free trade agreements because Multiple Choice there could be a decrease in consumer surplus. there could be an increase in consumer surplus. there could be a decrease in producer surplus. there could be an increase in producer surplus. The principal concept behind comparative advantage is that a nation should Multiple Choice concentrate production on those products for which it has the lowest domestic opportunity cost. strive to be self-sufficient in the production of essential goods and services. maximize its volume of trade with other nations. use tariffs and quotas to protect the production of vital products for the nation. Use the following table for a certain product’s market in Marketopia to answer the next question. Quantity Demanded Domestically Price Quantity Supplied Domestically 1,400 $10 2,200 1,600 9 2,000 1,800 8 1,800 2,000 7 1,600 2,200 6 1,400 2,400 5 1,200 If Marketopia is entirely closed to international trade, the equilibrium price and quantity would be Multiple Choice $6 and 1,400 units. $9 and 2,000 units. $7 and 2,000 units. $8 and 1,800 units. Benefits from international trade are not based on differences in Multiple Choice resource availability. technological capabilities. product quality and other attributes. income levels. Limits on the quantity or total value of specific products imported to a nation are Multiple Choice import quotas. nontariff barriers. protective tariffs. export subsidies. Governments often intervene in international trade and impose quotas to Multiple Choice improve the performance of multinational corporations. shift a nation’s production possibilities frontier. increase revenues from export subsidies. protect domestic industries from foreign competition. An import quota on a product reduces the quantity of the product imported and Multiple Choice will not affect the price of the product to the consumers. increases the total quantity of the product consumed. decreases the price of the product

49. to the consumers. increases the price of the product to the consumers. Tariffs Multiple Choice are excise taxes on goods exported abroad. are per-unit subsidies designed to promote exports. may be imposed either to raise revenue or to shield domestic producers from foreign competition. are also called import quotas. The slopes of the production possibilities curves for two nations reflect the Multiple Choice relative prices of the resources in the two nations. average income levels in the two nations. amounts of imports and exports of the two nations. opportunity costs of production in the two nations. If a nation imposes a tariff on an imported product, then that nation will experience a(n) Multiple Choice decrease in quantity supplied and an increase in the price of the product. decrease in demand and a decrease in the price of the product. decrease in the supply of, and an increase in the quantity demanded of, the product. increase in the quantity supplied of, and a decrease in the price of the product. A tariff is a Multiple Choice quantity limit. tax. price ceiling. subsidy. A tax imposed by the U.S. government on imported Chinese frozen shrimp would be an example of Multiple Choice a voluntary restriction. a regulatory trade restriction. a tariff. a quota. A maximum limit set on the amount of a specific good that may be imported into a country over a given period of time is called a Multiple Choice voluntary export restriction. tariff. quota. nontariff barrier. When a nation removes tariffs on imported products that nation will Multiple Choice experience lower prices and consume lower quantities. experience higher prices and consume lower quantities. experience higher prices and consume higher quantities. experience lower prices and consume higher quantities. The ratio at which nations will exchange one product for another is known as the Multiple Choice exchange rate. discount rate. terms of trade. balance of trade. The higher price of imported products due to trade barriers causes some consumers to shift their purchases to a domestically produced product that is now Multiple Choice higher in price because import competition has risen. higher in price because import competition has declined. lower in price because import competition has declined. lower in price because import competition has risen. The use of tariffs and quotas for trade protection results in Multiple Choice less rent- seeking activity. lower prices for domestic consumers. less efficiency

50. in the economy. less revenue for the government. When a nation removes restrictions on imported products that nation will Multiple Choice experience higher prices and consume lower quantities. experience lower prices and consume lower quantities. experience lower prices and consume higher quantities. experience higher prices and consume higher quantities. The benefit of saving some American jobs in specific industries protected from foreign competition Multiple Choice is much greater than the costs to the whole American economy. has risen in recent years. is much less than the costs to the whole American economy. has fallen in recent years. Assume that a tariff is imposed on an imported product. The difference between the domestic price and the world price is captured by Multiple Choice the government. domestic producers. foreign exporters. domestic consumers. Refer to the production possibility curve for Marketopia below. The graph indicates that with the resources and technology it has available, Marketopia Multiple Choice can produce either 40 units of rye or 20 units of eggs. cannot produce both 20 units of rye and 5 units of eggs. cannot produce both 20 units of rye and 10 units of eggs. can produce both 40 units of rye and 20 units of eggs. If an increase in the price of pineapple juice of 10% results in an increase in the demand for grape juice of 5%, the cross-price elasticity of demand between pineapple juice and grape juice is: -0.5. -5.0. 5.0. 0.5. An economist recently estimated that for every 1% increase in the price of french fries at fast-food restaurants, 0.44% fewer french fries are sold. This indicates that the demand for fast-food french fries is: inelastic. elastic. perfectly inelastic. unit-elastic. Generally, we calculate elasticity as the: percentage change in quantity demanded/supplied divided by the percentage change in price. percentage change in quantity demanded/supplied divided by the change in price. percentage change in price divided by the percentage change in quantity demanded/supplied. change in quantity demanded/supplied divided by the change in price. For which of the following products is demand likely to be the most inelastic? Flat screen TV Table salt Sports car In-ground hot tub If a state decided to place a tax on home heating oil, over time: demand would become less elastic and tax revenue would decline. demand would become less elastic and tax revenue would increase. demand would become