Econ Final Exam Review

The kitchen manager at a restaurant is deciding what assignments he should give his two cooks, John and David both earn the same hourly wage. John can make 25 pizzas or 40 servings of pasta per hour and David can make 20 pizzas or 30 servings of pasta. Which is the best choice?

• David should make pizza because he has an absolute advantage in making pizza.

• John should make pizza because has a comparative advantage in making pizza.

• John and David both should spend half their time making pizza and half making pasta because one has a comparative advantage in making pizza.

• David should make pizza because he has a comparative advantage in making pizza.

Every time that Joe washed his car, it rained the next day. If John concludes that his car washing causes it to rain, he would be:

• Comparing marginal cost to marginal benefit

• Making the post hoc fallacy

• Making the fallacy of composition mistake

• Ceteris paribus

A bakery can produce either cakes or cookies. If the price of cookies rises, then in the market for cake, we would expect

• The equilibrium price would decrease, but the equilibrium quantity would be ambiguous

• Both equilibrium price and equilibrium quantity would increase

• Both equilibrium price and equilibrium quantity would decrease

• The equilibrium quantity would decrease, but the equilibrium price would increase

Last year, Sefton purchased 60 lbs of potatoes to feed his family of five when his household income was $30,000. This year, his household income fell to $20,000 and Sefton purchased 80 lbs of potatoes. All else constant, Sefton's income elasticity of demand for potatoes is ___ and he considers potatoes as ____ good.

• negative; a normal

• postive; an inferior

• negative; an inferior

• positve; a normal

If the price of camcorders falls and the total amount of money spent on camcorders increased, that is, consumers' total expenditures on camcorders increased, we would expect that the demand for camcorders

• is inelastic over the relevant price range

• is elastic over the relevant price range

• must have shifted leftward

• must be upward sloping

If a price floor of $500 per ton is imposed in the steel market and the current market equilibrium price is $400 per ton, then the effects of the price floor on the steel market will be

• less steel than the allocative efficient quantity produced

• a decrease in producer surplus

• an increase in producer surplus

• more steel than the allocative efficient quantity produced

The distribution of income primarily determines which of the fundamental economic questions?

• How the goods and services are to be produced?

• Who will receive the goods and services produced?

• What goods and services are to be produced?

• How to plan the economy?

When considering trade between people we can stay that voluntary trade will occur until:

• it results in fair shares for everyone involved

• the trading partners each have an equal share of the goods being traded

• it is possible to make one person better off without making anyone else worse off

• it is not possible to make one person better off without making anyone else worse off

An increase in the demand for green tea raises the price of apples from $16 a pound to $20 a pound. As a result, quantity supplied of apples increases from 0.9 million to 1.1 million pounds. Using the midpoint formula, calculate the value of the price elasticity of supply of apples?

• 1.13

• 7.4

• 0.90

• 0.91

In the table, the market is equilibrium. Then a minimum wage rate is set at $10 per hour. The number of unemployed workers will be

• 4 million

• 2 million

• 0

• 1 million