Question: Beanlightened coffee is for Andrew a(n) ______ good.
Answer Options:
normal good
inferior good
luxury good
unrelated good
Answer: inferior good
Question: What is the opportunity cost of potato chip production in terms of computer chips?
Answer Options:
2
16
3/4
4/3
12
1/2
Answer: 4/3
Question: Now suppose that the demand for strawberries falls by 10 units at every price. Estimate the new equilibrium price and equilibrium quantity.
Answer Options:
Various numeric possibilities
Answer: New price: $2.50 (approx.); New quantity: 25 (approx.)
Question: Which of these prices would be binding if the government implements the price floor you selected?
Answer Options:
any price set above equilibrium
any price set below equilibrium
only at equilibrium
none are binding
Answer: any price set above the equilibrium price
Question: After a while, Angela decides to cut back on dark chocolate and enjoy white chocolate more. What happens as a result of Angela’s decision? (Select all that apply.)
Answer Options:
Vanessa’s individual demand for dark chocolate increases to compensate for Angela’s decreased demand.
The market demand for dark chocolate will decrease.
Angela’s individual demand for dark chocolate decreases.
Angela’s individual demand for white chocolate increases.
Answer: The market demand for dark chocolate will decrease; Angela’s individual demand for dark chocolate decreases; Angela’s individual demand for white chocolate increases.
Question: Indicate the equilibrium price and equilibrium quantity for strawberries.
Answer Options:
Various numeric possibilities
Answer: Price: $3; Quantity: 30
Question: Suppose sellers try to sell strawberries at $4. At that price, there would be a ______.
Answer Options:
shortage
surplus
equilibrium
Answer: surplus
Question: What type of price control would policy makers use to keep the price of wheat from getting too low?
Answer Options:
price ceiling
price floor
quota
subsidy
Answer: price floor
Question: The price ceiling (on apartments) results in a ______. The city now has a shortage or surplus of how many apartments?
Answer Options:
shortage or surplus; numeric values
Answer: shortage, 10,000
Question: The price of a gallon of gasoline greatly increases over a prolonged period. How would this impact the equilibrium price and quantity in the market for traditional internal combustion cars?
Answer Options:
stay the same
increase
decrease
Answer Options (Quantity):
decrease
stay the same
increase
Answer: Price decreases; Quantity decreases
Question: Why does the quantity of college education determined in a free market (without government intervention) represent a market failure?
Answer Options:
There are public externalities of education and given the high cost, less would be demanded than socially optimal.
Colleges locate in areas not convenient for students.
Too many students study humanities compared to STEM.
High barriers to entry discourage new entrants.
Answer: There are public externalities of education and given the high cost, less would be demanded than socially optimal.
Question: What is most likely to happen to the economy of the United States as a result of this infrastructure spending?
Answer Options:
Its PPF will expand.
Its PPF will contract.
Its economy will produce at a point outside the PPF.
Its economy will produce at a point inside the PPF.
Answer: Its PPF will expand.
Question: Determine what happens to equilibrium price and quantity in the global market for wheat (war disrupts supply, popular gluten-free trend lowers demand).
Answer Options:
may increase, decrease, or stay the same
will stay the same
will increase
will decrease
Answer Options (Quantity):
may increase, decrease, or stay the same
will stay the same
will decrease
will increase
Answer: Price may increase, decrease, or stay the same; Quantity will decrease
Question: In economic terms, Starbucks coffee is for Andrew a(n) ______ good.
Answer Options:
normal good
inferior good
luxury good
unrelated good
Answer: normal good
Question: If sellers still try to sell strawberries at $4, there would be a ______.
Answer Options:
shortage
surplus
equilibrium
Answer: surplus
Question: Andrew’s demand for Starbucks coffee changed as a result of ______.
Answer Options:
increased income
price changes
taste changes
population changes
Answer: increased income