Questions and Answers of Introduction To Economics

The graph shows the demand and supply of workers in a given market. The curve S(native) represents the supply of native workers in the market and S(native + immigrant) represents the supply of
The graph shows the demand and supply of workers in a given market. The curve S(native) represents the supply of native workers in the market and S(native + immigrant) represents the supply of
The graph shows the demand and supply of workers in a given market. The curve S(native) represents the supply of native workers in the market and S(native + immigrant) represents the supply of
Suppose that a film studio expects that hiring comedian Chris Rock to star in its next film will generate $50 million in extra revenue relative to hiring comedian Eddie Murphy to star in the film.
A reasonable argument against increased international trade is thata. International trade hurts U.S. consumers. b. International trade hurts U.S. producers. c. Some goods are important for national
Those that "win" from international trade include a. All workers. b. Workers who have comparative advantage in production.c. Employers in import-competing industries. d. Consumers of domestically
Suppose that the United States Organization of Movie Actors successfully negotiates for tariffs on movies imported to the U.S. As a result, we would expect to see a. A decrease in the equilibrium
What are some of the benefits of immigration? What are some of the costs?
A local labor market for lawn-mowing workers is initially in equilibrium. If there is an influx of low-skill immigrants to the area, which of the following is likely to occur in the market for
The accompanying graph shows the demand and supply for computer support workers in the U.S. At equilibrium, producer surplus is_______ per week.a. $12b. $2,000c. $24,000d. $16,000e $8,000 Wage per
Suppose a worker is deciding whether to move from one country to another. Describe three economic factors that are likely to influence his decision.
Why do more developed nations have larger immigrant populations than less developed nations?
The accompanying graph shows the demand and supply for computer support workers in the U.S. If there is an influx of 1,000 immigrants with computer support skills to the U.S., the new equilibrium
What factors would a firm consider when deciding whether to move production overseas?
If a foreign firm outsources its computer support work, and workers in the U.S. have comparative advantage in producing computer support, the U.S. workers in this market are likely to bea. Worse off
In a recent speech, a U.S. government official stated, "The physical distance along a great circle from Wausau, Wisconsin to Wuhan, China is fixed at 7,020 miles... [However] One of the defining
What effect would an increase in the wages of Indian workers have on the demand for American workers, ceteris paribus?a. No effect on demand, because price changes affect quantity demanded, which
The accompanying graph shows the demand and supply of workers in a given market. The curve S(native) represents the supply of native workers in the market and S(native + immigrant) represents the
Which of the following statements is true? An increase in immigration makes native workers a. Better off if it decreases the demand for native labor. b. Worse off if it increases the demand for
What are the costs and benefits having a fixed exchange rate system?
If the U.S. dollar appreciates against the Canadian dollar, a. It costs more U.S. dollars to obtain each Canadian dollar. b. It costs fewer U.S. dollars to obtain each Canadian dollar.c. It costs
What are some factors that would cause an increase in the demand for Mexican Pesos relative to U.S. dollars?
The accompanying figure shows the foreign exchange market between the South African Rand (ZAL) and the Mexican Peso (MXN).a. What is the price of each Peso in terms of Rand? b. What is the price of
If the U.S. dollar depreciates against the Canadian dollar,a. It costs more U.S. dollars to obtain each Canadian dollar.b. It costs fewer U.S. dollars to obtain each Canadian dollar.c. It costs fewer
If there is a decrease in the demand for Canadian dollars relative to U.S. dollars,a. The price and quantity of Canadian dollars traded will fall. b. The price and quantity of Canadian dollars will
Suppose that China maintains a fixed exchange rate for its currency (the Yuan) against the U.S. dollar. If the equilibrium price of Yuan in the foreign exchange market is below the government's
Suppose that China maintains a fixed exchange rate for its currency (the Yuan) against the U.S. dollar. If the equilibrium price of Yuan in the foreign exchange market is above the government's
Suppose that in equilibrium, the price of U.S. dollars (USD) relative to Canadian dollars (CAD) is 1 USD = 1.5 CAD. This means that it takes ________ USD to buy 1 CAD.a. 1.5b. 1c. 0.667d. 6.67
Ceteris paribus, if the USD appreciates against the Euro,a. U.S. exports to Europe will increase. b. U.S. imports from Europe will increase.c. European exports to the U.S. will increase.d. European
Ceteris paribus, if the USD depreciates against the Mexican peso,a. U.S. exports to Mexico will increase. b. U.S. imports from Mexico will increase.c. Mexican exports to the U.S. will increase. d.
An increase in the demand for Euros relative to Mexican pesos willa. Increase the price of Euros.b. Decrease the price of Euros.c. Increase the price of pesos.d. Decrease the price of pesos. e. a
Given that they create deadweight loss and inefficiency, why do agricultural subsidies continue to exist?
You observe that the price of coffee has decreased and the quantity sold has increased. Ceteris paribus, this could result froma. A decrease in the demand for coffee. b. An increase in the supply of
When Hugo Chavez became the president of Venezuela in 1999, he promised his people lower food prices. He felt this would ensure that everyone would have enough to eat, and farmers and other food
When the government pays Farmer Freddy to not plant corn on some of his land (and instead leave it empty), how does this affect Consumer Carrie?a. Consumer Carrie gets to pay a lower price for
A wheat producer is willing and able to sell her wheat at a price of $7 per bushel. This works well for her in the first year, but during the second year, the maximum price she is able to get for her
Farmer Fred is paid by the government to leave a fourth of his cropland unplanted during the next growing season. Farmer Fred's vegetables will probably be more expensive because of the reduced
Penelope's Pumpkin Patch produces and sells an average of 500 pumpkins per Halloween. This year, Penelope's fairy godmother visited her and turned all the worms in Penelope's garden into pumpkins, so
The accompanying figure depicts the market for milk in Sydney, Montana. If a late spring blizzard kills a large proportion of the dairy cows in Sydney, a possible new equilibrium price and quantity
Given that the demand for milk is relatively inelastic, an increase in the supply of milk would tend to generatea. A large fluctuation in price.b. A large fluctuation in quantity.c. Large fluctuation
The accompanying table shows the quantity of cheese demanded by and supplied to a city in a given week.a. Compute the value of consumer surplus and producer surplus when this market is in
Almost all ethanol currently in production in the U.S. is made from corn. U.S. corn and ethanol producers are generally different entities. The government currently provides a subsidy of $0.51 per
The figure depicts the market for milk in Sydney, Montana. If the price of Chips Ahoy Cookies (a complement good for consumers) falls, a possible new equilibrium price and quantity of milk could bea.
The figure depicts the market for milk in Sydney, Montana. Suppose the government imposes a price floor on milk of $900 per unit. At this price floor, the quantity of milk sold will be_______ units
The figure depicts the market for milk in Sydney, Montana. Suppose the government imposes a price floor on milk of $1,050 per unit. At this price floor, deadweight loss will be_______ per month.a.
Ceteris paribus, when the supply of beef increases, the quantity of beef sold will change by a smaller amount a. The more elastic is the demand for beef.b. The more inelastic is the demand for
Ceteris paribus, when the supply of beef increases, beef prices will change by a greater amounta. The more elastic is the demand for beef.b. The more inelastic is the demand for beef.c. The flatter
The accompanying table shows the marginal benefits and costs of beer production and consumption per week:a. Based on these private costs and benefits, what will be the equilibrium price of a
When production of a product causes negative externalities, we know that in the absence of government intervention, the producer's decision a. Will result in economic equity.b. Will result in
Alcohol is legal in the U.S. but marijuana is not. Why is this?
Legalization of drugs would most likely ____ the supply of drugs in the marketa. Increaseb. Decreasec. Not changed. Shift backwards
Figure A and Figure B represent two hypothetical demand curves for cocaine.a. Which demand curve would more likely reflect the demand of people who are addicted to cocaine, and which would reflect
In 2011, 16 states had enacted laws legalizing medical marijuana. How would the legalization of medical marijuana affect the market for illegal marijuana?
Legalization of drugs would most likely ______ demand for drugs in the market. a. Increaseb. Decreasec. Not changed. Shift backwards the
Would legalizing drugs reduce crime? Why or why not?
In general, drug prohibition a. Tends to increase drug use as drug pushers entice customers into drug use.b. Tends to decrease drug use as drug prices increase.c. Tends to cause drug prices to fall
In the demand curve shown, the price elasticity of demand between point A and point B is a. Elastic. b. Inelastic. c. Unit elastic.d. Perfectly inelastic.e. Perfectly elastic.
In the case of addicts (whose demand is relatively inelastic), drug prohibition will a. Tend to increase the revenues of drug dealers due to increased expenditures on drugs.b. Tend to decrease the
Suppose that the market for marijuana is shown in the accompanying graph, where MC(private) represents the private supply curve and MC(social) represents the social supply curve that reflects the
Suppose the price elasticity of demand for marijuana is -4. If the price of marijuana increased by 2 percent, the quantity demanded willa. Decrease by 8 percent. b. Decrease by 0.5 percent. c.
Suppose that the market for marijuana is shown in the graph, where MC(private) represents the private supply curve and MC(social) represents the social supply curve and reflects the full social
The accompanying table shows the marginal benefits and costs of paper production and consumption per week:a. Based on these private costs and benefits, what will be the equilibrium price of paper?b.
Suppose that the electric power industry is made up of two power plants. Each power plant has three smokestacks that emit sulfur dioxide. The accompanying table shows the emissions for the
Suppose that Medical Marijuana, Inc. is currently producing at a point where its private marginal cost of production is $15.00. At this level of production, social marginal cost is $25.00. At the
Suppose that the production of penicillin generates pollution of the Columbia River, which is gradually killing a valuable fish population. Among other problems, fishermen in the area are
When production of a product causes pollution, in the absence of government intervention the producer's decisiona. Will result in economic equity. b. Will result in economic efficiency. c. Will
Suppose that the production of penicillin generates pollution of the Columbia River, which is gradually killing a valuable fish population. Among other problems, fishermen in the area are
In the mid-19th century, before they were pushed to the brink of extinction, there were between 60 and 100 million American Bison in the U.S. There are an estimated 350,000 American Bison in the wild
"Fair-trade" coffee is sold with a certification that the coffee growers receive a "fair" price for their coffee crop. In order to pay growers more, fair trade coffee is sold at higher prices than
Suppose that the production of penicillin generates pollution of the Columbia River, which is gradually killing a valuable fish population. Among other problems, fishermen in the area are
Ceteris paribus, when the supply of beef increases, the quantity of beef traded will rise by a smaller amount a. When the demand for beef is elastic.b. When the demand for beef is inelastic.c. When
If the demand for milk is inelastic, will a small reduction in the supply of milk result in an increase or a decrease in the total revenue earned by milk suppliers? Why?
If the demand for a good is relatively inelastic, an increase in the price of the good will generatea. An increase in quantity demanded for the good and an increase in total revenue.b. An increase in
Marianne loves cinnamon rolls. Marianne always buys one cinnamon roll each morning, even when the price of a cinnamon roll increased from $1.50 to $2.50. Marianne's demand for cinnamon rolls is a.
Which of the following systems allows for the more equal distribution of goods and services among its citizens? a. Market capitalistb. Command socialist
The accompanying table shows the production function for WAS corporation, which sells wuzzies. a. Suppose the equilibrium price of a wuzzy is $2. Given this output price, what is the VMPL, of the
Communism relies most heavily on a________ economic system.a. Market capitalistb. Market socialist economicc. Command capitalist d. Command socialist
The United States relies most heavily on a_______ economic system. a. Market capitalistb. Market socialistc. Command capitalistd. Command socialist
Terrier Touring is a dog-walking service with the production function shown in the accompanying table. What is the marginal product of the third worker hired per hour? a $4.00 per hour b. 15 dogs
An economic system characterized by public resource ownership and private resource allocation decisions is a________ economic system. a. Market capitalist b. Market socialist c. Command
Terrier Touring is a dog-walking service with the production function shown in the accompanying table. If the wage is $12 per hour, Terrier Touring would want to a. Hire the first but not the second
Terrier Touring is a dog-walking service with the production function shown in the accompanying table. What is the total revenue earned if Terrier Touring hires four workers per hour? a. $18 per
Professional U.S. soccer players earn much less than professional U.S. baseball players. Using economic reasoning, explain why.
From an economic perspective, are professional sports players worth their multimillion-dollar salaries? Explain why or why not.
Suppose that the Mt. Pleasant Apple Company has the production function shown in the accompanying table. a. What is the MPL of the fourth worker hired per week? b. What is the VMPL, of the second
When we draw a supply and demand diagram describing the labor market, the supply curve_________ and the demand curve________.a. Represents employers, represents employees b. Represents employees,
In 2009, Alex Rodriguez admitted to using steroids in earlier baseball seasons. What would you expect to happen to his opportunities for endorsements as a result of this revelation?
A decrease in the supply of fast-food restaurant workers could be the result ofa. Higher wages paid to workers in other types of restaurants b. Lower wages paid to fast-food restaurant workers c.
By hiring workers based on their marginal benefits and marginal costs, the buyers in the labor market can a. Maximize the amount of labor hired.b. Minimize the amount of capital used.c. Maximize
The accompanying table shows production figures for Snoodle Corporation, which sells snoodles. Labor is Snoodle's only input, and wages make up Snoodle's only cost. If the equilibrium price of a
How does an increase in the demand for a product influence the demand for workers who produce that product?
Use a graph to illustrate how an increase in the supply of workers in a given labor market impacts wages and employment levels in that market.
Your friend tells you that our society has sick values because teachers make significantly less than sports stars like Alex Rodriguez. Applying the economic way of thinking, you argue thata. Sports
When hiring workers, it is only profit maximizing for firms to hire additional workers whena. The marginal benefit of each worker hired is positive. b. The marginal cost of each worker hired is
Why has the real value of the minimum wage declined since 1968, even though the nominal value of the minimum wage has increased several times since then?
Those that lose when the minimum wage is increased include a. Employers only.b. All workers.c. No workers.d. Some workers.
Are teenagers better off when a higher minimum wage enables some to get higher wages but causes others to lose their jobs?
One effect of the minimum wage is a. Higher unemployment among teenagers. b. Higher incomes for all workers.c. An overall reduction in poverty.d. More on-the-job training offered to workers.
Why do you think that businesses would generally be opposed to increases in the minimum wage?
The real value of the minimum wagea. Is set by employers.b. Is set by lawmakers.c. Is impacted by inflation.d. Is always the same as the nominal value of the minimum wage.

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