Economic Online Quiz Questions

Economic Online Quiz Questions

CHAPTER 3 QUESTIONS

Businesses must pay higher prices to obtain labour because…

the marginal cost of worker time increases as more hours of labour are supplied

There are differences between your smart supply choices and smart demand choices.  For you demand decision…

the marginal benefit decreases the more you buy

There are differences between your smart supply choices and smart demand choices.  For you supply decision…

the marginal cost increases as you provide more

Joanna gets paid $40 an hour to DJ at Club Keynes on Friday and Saturday nights.  The Club is closed all other night.  She also gets paid $15 an hour to work at the library.  The library will let her work as many hours as she has available.  Club Karl wants to hire Joanna to DJ on Wednesday night.  The marginal opportunity cost of hiring Joanna at Club Karl is $15 an hour.  –

note. When the day of week mentioned pervious is the night of hiring, it’s the first number.  When its any other day, it’s the second number. 

Amber bakes muffin and cookies to sell at the market.  If she bakes more cookies and fewer muffins, her

marginal cost of baking cookies increases

Amber bakes muffin and cookies to sell at the market.  If she bakes more muffins and fewer cookies, her

marginal cost of baking muffins increases

Since the marginal cost of your time increases,

you give up the most valuable time last..Or...you give up the least valuable time first.

You spruced up the house you were renting by having the house painted; planting hedges and flowers; buying new patio furniture; installing new carpeting, and purchasing new houseplants, bookshelves, and bedspreads.  You move unexpectedly to a new city. Which of the following mentioned above are an example of sunk costs?

The cost of the carpeting (or whatever cannot be removed)

You are considering selling your used car and buying a new car.  Which of the following is a sunk cost?

The tires you put on the used car OR the insurance you paid for the new car.

Sunk costs

do not influence smart, forward – looking decisions

Matthew bought a 1988 Toyota Corella for $2100.  A friend offered him $700 for car last week.  Matthew has been offered a job in France and is evaluating his opportunity cost.  Driving an ancient Toyota from Montreal to France is not possible.  When calculating his opportunity cost, Matthew should include

the $700 he could get from selling it to his friend (or whatever amount the person offers).

Emily has paid $1000 for a night school class. She can still get a refund is she drops out today.  When deciding whether to drop out of school, Emily should consider the

$700

Hailey plans to open a shoe store.  She has agreed to pay $20 per pair of shoes that she will order from her supplier.  She expects to sell 3000 pair next month.  She has signed a one-year lease for $40 000.  A local television station offers to run a commercial for $15 000, announcing the grand opening.  When deciding or not run this ad, Hailey’s sunk cost are

$40 000

When the price of a price or service falls, this create incentives for

the quantity supplied to decrease because of covering the lower marginal cost of production. 

When price rise, individuals and businesses devote more of their time or resources to producing or supplying because

higher prices usually mean higher profits. 

Santiago’s Stationary Services can produce cards and tablets.  The daily production possibilities or two products are shown. 

This question used equations Cards Given Up/More Tablets

CHAPTER FOUR

A market

is the interactions between buyers and sellers OR involves negotiations between buyers and seller that result in exchange. 

For markets to work

government must define and protect property right. 

Voluntary exchange occurs in market as long as

marginal opportunity cost is below the price for seller. 

Property rights

are enforced by government OR provide incentives for selling OR are a prerequisite for anything to produced.  

Voluntary exchange that occurs in market

is the result of cooperation between the buyer and the seller OR prices exceeds the marginal opportunity cost for the seller. 

Voluntary exchange that occurs in market in a market

is mutually beneficial.  

Prices

are the outcome of market process of competing bids and offers. 

Considering the information provided in the table and graph on your screen, suppose the price per hour is $40, in this case there will be

surplus, the creates pressure for the prices to fall. 

Suppose the price of per book $30 with the information provided on your screen, the in the case there will be

an excess demand, this creates an incentive for increase in the quantity supplied. 

Supposed Henri Nail’s sets the manicure price too high. They are experience a decrease in the quantity demanded for manicures and will subsequently reduce the number of manicurist. 

The miracle of markets

occurs because prices serve as signal to consumer and businesses for smart choices OR occurs when consumers and businesses make self – interested smart choice based on prices.

When the price is above the market – clearing price

rising inventories will cause the price to fall.

Price signals in markets

creates incentives for consumers and producers result in the production of all of the products or services we want. 

EQUILBRUIM PRICE IS THE CENTRE POINT ON A GRAPH.

The market-clearing price

equalizes demanded and quantity supplied. 

If the market for Twinkies there are no shortages and no surpluses, then

the price in that market is called equilibrium price.

Consider the following events.  Producers face increase regulations. The supply decreases; the market-clearing price increases; and quantity demanded decreases. 

Consider the following events. Income of the consumers increases. The demand increases; the market-clearing price increases; and quantity supplied increases. 

The market-clearing price will rise when supply decrease or demand increases and when it falls supply increases and demand decreases.

Meteorologists forecasts a mild winter with very little snow in southern Ontario. Demand for snow shovels decrease, this causes a surplus. The market clearing price decreases; the quantity supplied decreases; and the surplus disappears (reverse answers for intense snow storm)

Consider the following events.  The company faces a labour strike at the factory.  The supply decreases; the markets-clearing increases; and quantity demanded decreases. 

Consider the following events.  Special motorbike lanes are added to highways. The demand increase; the market-clearing price increases; and quantity supplied increases.

In an efficient market outcome, products and services produced at the lowest costs.

CHAPTER 5

A retailer noticed that by raising his price slightly, his total revenue increased. What can you conclude about the price elasticity of demand within the current price range. Demand is elastic.

A(n) 2% increase in price results in a(n) 4% decrease in quantity demanded.  That elasticity of demand is 2 (4% divided by 2%)

Which of the following influences the prices elasticity of demand? Time to Adjust

Which of the following influences the price elasticity of demand? Proportion of the income spent on the product or service

When demand is elastic, there is a high demand to shop elsewhere

A DVD store raised the price of its DVDs from $9 to $11. Correspondingly, sales fell from 1200 to 800 per month.  Ignoring the negative sign, what is the price elasticity of demand.  2.00. Demand is elastic.

A retailer noticed that by lowering the price slightly, his total revenue decreased.  What can you conclude about the price elasticity of demand within the current price range.  Demand is inelastic.

A(n) 4% decrease in price results in a(n) 40% increase in quantity demanded.  The elasticity of demand is 10

Which of the following influences the price elasticity of demand? Number of substitutes the product or service has. 

When demand is elastic, the value for elasticity is greater than one. 

A DVD store lowered the price of its DVDs from $18 to $12. Correspondingly, sales increased 1900 to 2100 per month. Ignoring the negative sign, what is the price elasticity of demand? 0.25. Demand is inelastic.

A retailer noticed that by raising his price slightly, his total revenue decreased. What can you conclude about the price elasticity of demand within the current price range. Demand is inelastic.

A clothing store decreases the price of its T-shirts from $20 to $16.  Correspondingly, sales increased 1800 to 2000 per month. Ignoring the negative sign, what is the price elasticity of demand? The total revenue decreased, indicating that demand is inelastic

If a percent 4% rise in the price of peanut butter causes total revenue to fall by 8%, then demand for peanut butter, is elastic

*When the Montreal Gazette newspaper lowered the weekly subscription price from $5.60 to $2.80 – a saving of 50% - the number of subscriptions sold increased by 15%. This suggests that their consumers have inelastic demand and that the lower price decreased revenues. 

Suppose that Norma is disappointed in the revenue from her custom dress shop. She is thinking of the raising price, but she asks you for advice. You decide she should raise the price if demand is inelastic

A clothing store increase the price of its T-shirts from $12 to $20.  Correspondingly, sales increased 2800 to 1200 per month. Ignoring the negative sign, what is the price elasticity of demand? The total revenue decreased, indicating that demand is elastic

*When the Toronto Star newspaper lowered the weekly subscription price from $5.60 to $4.20 – a saving of 25% - the number of subscriptions sold increased by 30%. This suggests that their consumers have elastic demand and that the lower price increased revenues. 

Suppose that Norma is disappointed in the revenue from her custom dress shop. She is thinking of the lowering price, but she asks you for advice. You decide she should lower the price if demand is elastic

A clothing store decreases the price of its T-shirts from $14 to $12.  Correspondingly, sales increased 1500 to 2800 per month. The total revenue increased, indicating that demand is elastic

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