The market for corn is initially in equilibrium. Suppose the production of biofu
ID: 2505798 • Letter: T
Question
The market for corn is initially in equilibrium. Suppose the production of biofuels, which use corn as an input, decreases, and at the same time, decreases in the price of oil cause farm production costs to fall. Which of the following explains the effect on equilibrium price and quantity in the corn market? The quantity of corn will fall but the effect on equilibrium price cannot be determined without more information. The price of corn will fall but the effect on equilibrium quantity cannot be determined without more information. The quantity of corn will rise: but the effect on equilibrium price cannot be determined without more information. The price and quantity of corn will rise. The price and quantity of corn will fall. Consider the figure 4B-2. If the price is $20, find the area that represents producer surplus. F + E + D. C+D. A+B+C. A+B. What happens in the market with an upward sloping supply curve when there is a shift in the demand curve due to an external shock? Price will not change. Production decisions will be unaffected. A new equilibrium price will be achieved over some period of time. Price will immediately adjust to a new equilibrium. Government-enforced prices such as price ceilings are only imposed on goods where market price has no useful function. aid in the rationing function performed by prices in a market system. disrupt the rationing function performed by prices in a market system. ration economic resources more efficiently than prices in a market system. Labor is a key input at fast-food restaurants. Suppose that the government boosts the minimum wage above the equilibrium wage of fast-food workers. Which of the following best describes the response of the quantity of labor employed at restaurants? More workers will be employed since the wage increase encourages people to seek jobs at these restaurants. More workers will be employed since the wage increase tells managers that more workers are available. The same number of workers will be employed since a restaurant's operation requires a fixed amount of labor. Fewer workers will be employed since the wage increase will induce managers to seek to substitute other inputs for the now relatively more expensive labor. Which of the following is not an example of a transaction cost? The opportunity cost of time spent looking for stores selling the desired item. The cost of returning a defective product. The enjoyment of using the good. The time and effort spent researching the product as well as its various sellers. consumers. harms producers and wealthy consumers. reduces gains from trade. Black markets usually arise when there are price floors. price ceilings. price quotas. price subsidies Economists assume that when there is a change in demand and/or supply, that prices reach a new equilibrium slowly. quickly. after an adjustment period that varies. after a protracted negotiation process. In a price system, relative prices do not signal information about changes in market conditions. relative prices change constantly to reflect changes in supply and demand. relative prices change infrequently due to transaction costs. relative prices are set by central planners based on projected supply and demand. Figure 4-B1 shows the market for economics textbooks. What will be the value of consumer surplus if the market price is $10? $900. $600. $1500. $450. Consider Figure 4B-3: that represents the market for long-stemmed roses. If the market clearing price is $15: what is the total value of gains from trade? $800 $200. $600. $400. The concept of consumer surplus is best described by the following situation. Jamie bought twenty video games at $2 apiece, since these were on sale. Ron purchased a laptop last month for $700, now it is selling for $550. The maximum price that Jackie was willing to pay for an iphone was $400, but she bought it for $250 on black Friday. Kevin was surprised that he could sell his economics text for $26 on Amazon, although he was willing to accept $20 for it. The consequences of decriminalizing illegal drugs have long been debated. Some claim that legalization will lower the price of these drugs and reduce related crime. Others claim that more people will use these drugs. Suppose that some of these drugs are legalized so that anyone may sell them and use them. Based on positive economic analysis, such decriminalization will lead to an increase in quantity demanded of these drugs and in price. a reduction in quantity demanded of these drugs and an increase in price. a reduction in both quantity demanded of these drugs and in price. a reduction in price of these drugs and an increase in quantity demanded. There are simultaneous changes in the demand for and supply of tablet devices, with the consequences being an unambiguous decrease in the equilibrium quantity of these devices but no change in the market clearing price. What changes in the demand for and supply of tablet devices could have generated these outcomes? Demand decreases and supply decreases. Demand decreases and supply increases. Demand increases and supply decreases. Demand increases and supply increases. Prices perform a rationing function by allocating goods to the buyers who are willing and able to pay the highest price. eliminating scarcity in the market. making sure that buyers do not have to wait for goods. allowing high-demand buyers to trade ration coupons. There are simultaneous changes in the demand for and supply of global-positioning-system (GPS) devices, with the consequences being an unambiguous decrease in the market clearing price of these devices but no change in the equilibrium quantity. What changes in the demand for and supply of GPS devices could have generated these outcomes? Demand increases and supply increases. Demand increases and supply decreases. Demand decreases and supply decreases. Demand decreases and supply increases.Explanation / Answer
1)b
2)C
3)B
4)C
5)D
6)c
7)C
8)D
9)B
10)D
11)D
12)C
13)B
14)B
15)B
16)A
17)B
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