Econ 121, Quiz 1 help
Econ 121, Quiz 1 help Econ 121
Santa Ana College
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This 10 page Study Guide was uploaded by alicekhanh on Sunday April 3, 2016. The Study Guide belongs to Econ 121 at Santa Ana College taught by Gus Montes in Spring 2016. Since its upload, it has received 34 views. For similar materials see Microeconomics in Economcs at Santa Ana College.
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Date Created: 04/03/16
1. B Allocating dorm rooms is an economic problem because the problem of coordination depends on the diverse wants of individual. 2. A If supply and demand both shift to the right, equilibrium quantity rises, but the equilibrium price may rise, fall, or stay the same because when demand curve shifts to the right, the price and quantity rises. But supply shifts to the right too, the price falls and quantity still rises. So the equilibrium quantity rises, and equilibrium price is ambiguous. 3. C Invisible hand Cockfighting Invisible handshake Invisible foot 4. C There is more demand so there are more consumers. D1 Price of each CD 0 Quantity of CDs per week 5. A The law of supply said that: P Q s Ceteris paribus P Q s Q s quantity supplied of nurses 6. C “Other thing constant” means ceteris paribus in supply/demand analysis meaning that we are considering changes in just one factor. 7. A Price S2 Weather is a shift factor of supply. The hurricane shifts the supply curve for S1 tomatoes to the left. P2 P1 D Q2 Q 1 Quantity 8. C Laissez-faire is not a theorem because it extends “implication of a model to reality, then drawing conclusions about the real world”. French for “let events take their course, leaving thing alone.” 9. B - Supplyrefers to a schedule of quantities a seller is willing to sell per unit of time at various prices, other thing constant (supply curve) - Quantity supplied refers to a specific amount that will be supplied at a specific time (point on the curve) 10. D This is a third-party-payer-market because each individual consumer has to pay for their consumption of road use 11. D Because Mary still has 300 more free minutes, so there is no marginal cost if she makes teo more calls lasting 10 minutes each. 12. C When a tariff of $10 is imposed on Price S2 imported silk, the supply curve shifts 20 S1 up from S 1o S .2However, at $20, quantity supplied exceed quantity 15 demanded. The consumers are not 10 willing to buy 100 silk blouse at $20, so suppliers lower their price until D quantity supplied equals quantity demanded, which is at $15. This is a 7 10 Quantity in hundreds new equilibrium Revenue = 10 x 700 = $7,000 13. TRUE - Price floors: government imposed limits on how low a price can be charged. - Minimum wage: laws specifying the lowest wage a firm can legally pay an employee. 14. A Entrepreneurship is the ability to organize and get something done. 15. TRUE Price Ann’s Supply Barry’ Supply Charlie’s Supply Market Supply $3.50 7 5 2 14 Market Supply = 7 + 5 + 2 = 14 16. B S 2 A S1 J Revenue for the government: B H BDGH C I G D E F 17. B It states that if people will tend to buy less of one good and buy other good instead. So they will substitute it. 18. B Any economic system addresses the question what is produced, how it is produced, and for whom it is produced. 19. C These points achieve as much output as possible from the given amount of resources. Point A, C, F achieve the goal of resources the same amount of outputs as inputs. 20. C According to the graph, when price is $2, the quantity demanded is 45. 21. C S 2 Price S1 Because of higher cost of production, the suppliers decrease their supply. So the supply curve shifts to the left. D 1 D2 Quantity 22. C The supplier will charge $4 because at price $1. Consumers demand 600 units. The supplier will charge $4 to supply that 600 units. 23. D Corporation, government and cultural norms are all economic institution because they are all the formal and informal rules that constrain human economic behavior. 24. D Q d 1750 – 130P Q s 1000 + 170P If the market is in equilibrium, quantity demanded equals quantity supplied, which is Q = Q d s 1750 – 130P = 1000 + 170P P = 2.5 Q = 1750 – 130 x 2.5 = 1,425 Therefore, the equilibrium price and quantity of wheat are $2.50 a ton and 1,425 thousands of tons respectively. 25. C - Sole proprietorship: direct control by owner, unlimited personal liability. - Partnership: with two or more owners, unlimited personal liability. - Corporation: legally owned by stockholders, no personal liability. 26. A - Demand refers to a schedule of quantities of a good that will be bought per unit of time at various prices, other thing constant. - Quantity demanded refers to a specific amount that will be demanded per unit of time at a specific price, other thing constant. 27. FALSE S2 S1 Price Trade sanctions imposed on Iraq P2 that limited Iraq’s production of oil caused the supply curve shifted to P 1 the left. Equilibrium price rose, and D1 equilibrium quantity fell. Q 2 Q1 Quantity 28. A - At P : there will be a S 3 surplus. Price - At P2: the quantity P3 demanded equals quantity P2 supplied. P1 - At P and P : at P , quantity 1 1 0 P0 D demanded is the largest and quantity supplied is the Qs Q D Quantity smallest => P 0 creates greatest shortage. 29. C Because the price of gasoline is higher, comsumers will sunstitute for hybrid cars, makes its demand increase. The Hummer is gas guzzler so the demand will be decrease. 30. B - 10 units of eggs and 20 units rye is not a production efficient because the economy haven’t achieved as much output as possible from the given amount of resources. - With 10 units of eggs, the economy can produce 38 units of rye. Or with 20 units of rye, the economy can produce 18 units of eggs. 31. C S Price The rise in demand shifted the demand for oil to the right. Due to the law of supply, as price rises, D 2 quantity supplied rises. D 1 Quantity 32. C Price 8 S When the co-paymet is $2 per pill, quantity demanded is 45. And with 6 45 units, the supplied need to pay 4 $6 per pill. 2 Total expenditures = 6 x 45 = $270 D 15 30 45 60 Quantity 33. A If the marginal benefits of doing something exceed marginal costs, do it. Chuck refuses to pay for the house at the price $72,000, so we can infer that the marginal benefit must be less than $72,000. 34. B Price Mike quantity in pecks Janet quantity in pecks $2 18 3 Market demand = 18 + 3 = 21 35. A Luigi will not consume any pizza because the marginal benefit per dinner is $4.00, and the price per dinner is $4.99 – the marginal cost exceed marginal benefit. 36. D The Industrial Revolution was important to the history of economic systems because it increased the power of capitalists and eventually led to a revolution instituting capitalism as the dominant economic system. 37. D S Price Price cuts have changed buyer’s expectation. Consumers waiting for P1 deeper discount, so the demand for P2 it falls – demand curve shifted to D2 D1 the left. Q 2 Q1 Quantity 38. D Both Colombia and Brazil need to give up 4 tons of papayas to produce 1 ton of bananas. Therefore, both of them don’t have comparative advantage => These countries cannot gain from trading. 39. A A decrease in the cost of producing leather jacket helps suppliers to produce more leather jackets, so the supply of leather jackets would be expected to increase. 40. C Socialism is an economic system based on individual’s goodwill toward others, not on their own self-interest, and in which, in principle, society decides what, how, and for whom to produce. 41. A Due to the economic decision rule which is if the marginal benefits of doing something exceed the marginal costs, do it. As long as Alexandra’s hourly wage rate is less than $20, she should study for the quiz. 42. C - Microeconomics is the study of how individual choice is influenced by economic forces. - Macroeconomics is the study of economy as a whole. 43. B A change in price of the good causes the quantity demanded to change without changing the demand curve because if a price of one good rises or falls, consumers will buy more or less depending on where the new price is set. Therefore, the demand curve does not move. 44. A From a purely economic perspective, the death penalty for computer hackers is reasonable based on cost/benefit analysis. However, societyshould make rational decision, take into account social, political, and religious factors. 45. A Current consumption Future consumption 800 100 750 50 260 160 The opportunity cost of 50 current consumption is 160 future consumption or the opportunity cost of 1 current consumption is 3.2 future consumption. When increasing current consumption from 750 to 800, the opportunitycost is the greatest. 46. A Wine Cloth England 200 400 Portugal 200 100 - England: the opportunity cost of 400 units of cloth is 200 units of wine, or the opportunity cost of 1 units of cloth is2⁄ units of wine. - Portugal: the opportunity cost of 100 units of cloth is 200 units of wine, or the opportunity cost of 1 unit of cloth is 2 unit of wine. 47. B Resale price of tickets to Miami Heat games will rise because lots of people want to buy tickets. Due to the law of supply, as the price rises, quantity supplied will rise too. 48. A When all inputs are equally adaptable to the production of all goods, these inputs will change completely from the production of one good to another. Therefore, the principle of increasing marginal opportunity cost does not hold. 49. FALSE The law of demand states that the quantity demanded of a good is inversely related to the price of that good, other thing constant. As the price of a good goes up, the quantity demanded goes down, so demand curve is downward-sloping. 50. D We could sell anyof them because currently, each stock is priced at $15. Therefore, when we need $15, just sell any of them. 51. C An L3C is not only a for-profit corporation but also take on a social mission. 52. B Under the coordination definition of economics, there still would be an economic problem. 53. B S2 Price S1 An increase in price and decrease in P2 quantity are consistent with a leftward shift in supply and no shift P1 in demand. D 1 Q 2 Q 1 Quantity 54. D The marginal benefit of one trip is $400, and the marginal cost of each trip is $600. Because the marginal cost exceeds the marginal benefit, Rodney will not take any trips this years. 55. B This conclusion is a positive statement because it’s true that raising payroll taxes can maintain Social Security benefits.
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