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Questions and Answers
What is the opportunity cost of attending one class session if you could earn $8 an hour by flipping hamburgers and $5 an hour by waiting tables?
What is the opportunity cost of attending one class session if you could earn $8 an hour by flipping hamburgers and $5 an hour by waiting tables?
If an opportunity cost is constant for two products, what shape will the production possibility curve take?
If an opportunity cost is constant for two products, what shape will the production possibility curve take?
Who has the comparative advantage in producing donuts according to the provided production data?
Who has the comparative advantage in producing donuts according to the provided production data?
What is the total monetary cost of the economics course you attend, assuming you missed all 30 classes to work instead?
What is the total monetary cost of the economics course you attend, assuming you missed all 30 classes to work instead?
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If you can either produce 10 donuts or 15 cupcakes in a day, what is the opportunity cost of producing one donut?
If you can either produce 10 donuts or 15 cupcakes in a day, what is the opportunity cost of producing one donut?
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Considering the production possibility curve under constant opportunity costs, what does the slope of the curve indicate?
Considering the production possibility curve under constant opportunity costs, what does the slope of the curve indicate?
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If the opportunity cost of donuts is lower for Tony than for John, what can be inferred?
If the opportunity cost of donuts is lower for Tony than for John, what can be inferred?
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In the context of the course you paid for, what does opportunity cost express?
In the context of the course you paid for, what does opportunity cost express?
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What is the type of demand if at a price of $24, 36 orchids are sold and at $30, 24 orchids are sold?
What is the type of demand if at a price of $24, 36 orchids are sold and at $30, 24 orchids are sold?
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If the price increases by 15 percent and the price elasticity of demand is 3, what happens to the quantity demanded?
If the price increases by 15 percent and the price elasticity of demand is 3, what happens to the quantity demanded?
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What does a price elasticity of demand of 0.23 for apple juice indicate?
What does a price elasticity of demand of 0.23 for apple juice indicate?
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How would the revenue of apple juice sellers change if the price decreases given the elasticity of 0.23?
How would the revenue of apple juice sellers change if the price decreases given the elasticity of 0.23?
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What would be the effect on demand if Octavia increases the price of her orchids from $24 to $30?
What would be the effect on demand if Octavia increases the price of her orchids from $24 to $30?
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What does it imply if the price elasticity of a good is greater than 1?
What does it imply if the price elasticity of a good is greater than 1?
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If a seller increases the price of a product and total revenue decreases, what can be inferred about the price elasticity of that product?
If a seller increases the price of a product and total revenue decreases, what can be inferred about the price elasticity of that product?
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If an increase in price leads to a proportional decrease in quantity demanded, what type of elasticity is reflected?
If an increase in price leads to a proportional decrease in quantity demanded, what type of elasticity is reflected?
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What happens to the demand curve for EnergyBlast when consumers are concerned about dycloropoxaphil?
What happens to the demand curve for EnergyBlast when consumers are concerned about dycloropoxaphil?
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What is the effect on the market equilibrium price after a decrease in demand for EnergyBlast?
What is the effect on the market equilibrium price after a decrease in demand for EnergyBlast?
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How does an increase in crop yield from Stevia farming impact the supply of EnergyBlast?
How does an increase in crop yield from Stevia farming impact the supply of EnergyBlast?
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What is the expected change in the market equilibrium quantity of EnergyBlast after Stevia farmers use new fertilizers?
What is the expected change in the market equilibrium quantity of EnergyBlast after Stevia farmers use new fertilizers?
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When an input price decreases, such as Stevia due to new fertilizers, what happens to the supply curve?
When an input price decreases, such as Stevia due to new fertilizers, what happens to the supply curve?
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Which of the following requires the supply curve to shift for EnergyBlast?
Which of the following requires the supply curve to shift for EnergyBlast?
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What is the immediate effect on the quantity demanded for EnergyBlast when there is a negative shift in demand?
What is the immediate effect on the quantity demanded for EnergyBlast when there is a negative shift in demand?
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What is the condition for profit maximization in a firm operating under perfect competition?
What is the condition for profit maximization in a firm operating under perfect competition?
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What is the relationship between supply shifts and market equilibrium price?
What is the relationship between supply shifts and market equilibrium price?
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Which statements correctly describe profit maximization conditions for different types of market structures?
Which statements correctly describe profit maximization conditions for different types of market structures?
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How can one distinguish between a monopoly graph and a monopolistic competition graph?
How can one distinguish between a monopoly graph and a monopolistic competition graph?
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In monopolistic competition, what is the relationship between marginal revenue and marginal cost at the profit maximization point?
In monopolistic competition, what is the relationship between marginal revenue and marginal cost at the profit maximization point?
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What is the correct relationship for a monopoly when determining the quantity produced to maximize profits?
What is the correct relationship for a monopoly when determining the quantity produced to maximize profits?
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Which market structure utilizes average revenue and average cost for its profit maximization criteria?
Which market structure utilizes average revenue and average cost for its profit maximization criteria?
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Which of the following accurately reflects the profit maximization strategy for monopolistic competition?
Which of the following accurately reflects the profit maximization strategy for monopolistic competition?
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In terms of elasticity, how do marginal revenue and average revenue curves differ between monopoly and monopolistic competition?
In terms of elasticity, how do marginal revenue and average revenue curves differ between monopoly and monopolistic competition?
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What formula correctly represents consumer surplus (CS) when a price ceiling is implemented?
What formula correctly represents consumer surplus (CS) when a price ceiling is implemented?
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Which of the following equations represents the deadweight loss (DW) under a price ceiling?
Which of the following equations represents the deadweight loss (DW) under a price ceiling?
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How does the imposition of a price ceiling affect the market equilibrium?
How does the imposition of a price ceiling affect the market equilibrium?
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What is the expected consumer surplus when the price ceiling (PC) is below the equilibrium price?
What is the expected consumer surplus when the price ceiling (PC) is below the equilibrium price?
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Which condition must hold true for a price ceiling to lead to deadweight loss?
Which condition must hold true for a price ceiling to lead to deadweight loss?
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When given the equation DW = (P2 - PC) ∙ (Q2 - Q1), what does it represent in the context of market effects?
When given the equation DW = (P2 - PC) ∙ (Q2 - Q1), what does it represent in the context of market effects?
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What factors influence the quantity supplied in a market affected by a price ceiling?
What factors influence the quantity supplied in a market affected by a price ceiling?
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Under perfect competition, what happens to deadweight loss if the price ceiling is set significantly below equilibrium?
Under perfect competition, what happens to deadweight loss if the price ceiling is set significantly below equilibrium?
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What is the price per carat at the monopolist's profit maximizing position?
What is the price per carat at the monopolist's profit maximizing position?
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At which price per carat does deadweight loss begin to appear in the monopoly market?
At which price per carat does deadweight loss begin to appear in the monopoly market?
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What is the quantity of diamonds produced at the monopolist's profit maximizing position, in thousands of carats?
What is the quantity of diamonds produced at the monopolist's profit maximizing position, in thousands of carats?
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At what price does the marginal cost equal the marginal revenue in the market for diamonds?
At what price does the marginal cost equal the marginal revenue in the market for diamonds?
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Which of the following prices per carat represents the highest marginal cost in this monopoly?
Which of the following prices per carat represents the highest marginal cost in this monopoly?
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What price corresponds to the lowest point of demand in the diamond monopoly market?
What price corresponds to the lowest point of demand in the diamond monopoly market?
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How does the existence of deadweight loss in a monopoly affect consumer surplus?
How does the existence of deadweight loss in a monopoly affect consumer surplus?
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Study Notes
EC 111 Final Review Session
- Review session presented by Geek Squad on December 8, 2024
- Geek Squad is a team of peer tutors from the Office of Student Success
- They collaborate with academic departments to create review material for AC 115, AC 201, EC 111, FI 118, and MA 105 courses
- Review sessions are in a question-and-answer format to prepare students for exams
Opportunity Cost
-
Question 1: If you paid $300 for a 30-hour economics course, and could have flipped burgers for $8/hour or waited tables for $5/hour, what's the opportunity cost of attending each class?
- Answer: $18
Opportunity Cost
-
Question 2: If opportunity costs are constant, what is the shape of the production possibility curve?
- Answer: A downward-sloping straight line
Comparative Advantage
-
Question 3: John can produce 200 donuts or 100 cupcakes in a day, and Tony can produce 150 donuts or 50 cupcakes in a day. Who has the comparative advantage in producing donuts?
- Answer: John
Price Elasticity of Demand
-
Question 4: Octavia sells orchids. At $24, she sells 36 orchids; at $30, she sells 24. What is the elasticity of demand for her orchids?
- Answer: Elastic
Price Elasticity
- Question 5: If the percentage increase in price is 15% and the price elasticity of demand is 3, then quantity demanded will decrease by 45%.
Price Elasticity
- Question 6 (Apple Juice): Economists estimated that the price elasticity for apple juice is 0.23. This means that an increase in the price of apple juice will lead to an increase in revenue for apple juice sellers.
Marginal Utility
- Question 7: (Table of Utility for Pants and Shirts) The notes show a table on Marginal Utility and Marginal Utility per Dollar for a consumer who purchases pants and shirts. This involves calculating the additional utility derived from consuming one more unit of each item.
Optimal Bundle
- Question 8: (Graphing Utility and Optimal Bundle, continuation of question 7) The table and graph illustrate how a consumer (Josh) can spend his $50 income to maximize utility by buying a combination of pants and shirts. The aim is to find the combination that provides the highest level of satisfaction for a given budget.
Supply and Demand Shocks
- Question 9 (Shock 1; EnergyBlast consumption): A study linking a preservative to high blood pressure negatively impacts EnergyBlast demand (a negative shift in demand curve), decreasing both equilibrium price and quantity.
- Question 10 (Shock 2; Stevia crop yield): A new fertilizer increasing stevia crop yield increases the supply of stevia (a rightward shift in the supply curve), leading to lower market equilibrium price and increased market equilibrium quantity
Simultaneous Shocks
- Question 11 (simultaneous shocks to EnergyBlast market): A study linking coffee to cancer and new regulations increasing preservative cost negatively affect EnergyBlast demand (leftward shift), while the supply also shifts leftward. This results in an indeterminate increase/decrease in the equilibrium quantity depending on the magnitudes of the demand and supply shifts.
Profit Maximization
- Question 12: Profit maximization occurs when Marginal Revenue (MR) equals Marginal Cost (MC). In perfect competition, this occurs where Price (P) = MC. In monopolistic competition, this also occurs where MR=MC.
Conceptual Multiple Choice
- Question 13: The key difference between monopoly and monopolistic competition graphs is that monopolistic competition graphs show more elastic MR and AR curves compared to monopoly graphs.
Conceptual Multiple Choice
- Question 14: Graphing profit areas for monopoly, monopolistic competition, and perfect competition illustrates the different profit scenarios in these market structures. Perfect competition might result in zero profit in the short run, but there are circumstances where profit can arise.
Producer and Consumer Surplus, Deadweight Loss
- Topic: Producer and Consumer Surplus, Deadweight Loss, in relation to a market equilibrium and price ceiling/shocks calculations.
Producer Surplus
- Question 15: In a perfectly competitive rice market that is currently at equilibrium, the presenter needs to determine what the producer surplus is based on a diagram presented in the slides. The answer is within the given options.
Price Ceiling
- Question 16: A price ceiling in a wheat market (perfectly competitive) forces a change in the market equilibrium. The presenter needs to determine the formula for the new Consumer Surplus and Deadweight Loss, given the data in the slides. The solution is presented in the various formula options.
Deadweight Loss
- Question 17: Given a monopoly market for diamonds, and a graph of the market demand, supply, MR, and MC curves, find the appropriate deadweight loss value based on the graph provided in the presentation. The correct value for deadweight loss is one of the given options.
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Description
This quiz covers key concepts in economics, including opportunity cost, production possibility curves, and comparative advantage. You will analyze scenarios related to class attendance, production choices, and market demand to evaluate economic decisions. Test your understanding of these fundamental principles.
