Online Quiz 2 - n/a PDF

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Student: _____________________ Date: _____________________

Instructor: Mohammad Hossain Course: Microeconomics: Canada in the Assignment: Online Quiz 2 Global Environment, 10th

1. The table shows the demand and supply schedules for on-campus housing. If the college strictly enforced a rent ceiling of $500 a month, what is the rent paid, how many rooms are rented, and is the on-campus housing market efficient? If the college puts a strictly enforced rent ceiling on rooms of $500 a month, rent is $ and the number of rooms rented is

.

Rent (dollars per room)

500 550 600 650 700 750

If the college strictly enforces the rent ceiling of $500 a month, the on-campus housing market is ______ because ______. A. inefficient; the rent ceiling has no effect on the number of rooms rented B. efficient; the rent ceiling does not change the number of rooms rented C. efficient; with the rent ceiling fewer rooms are rented D. efficient; with the rent ceiling more rooms are rented Answers 500 2,250 B. efficient; the rent ceiling does not change the number of rooms rented

Quantity demanded

Quantity supplied

(rooms)

2,500 2,250 2,000 1,750 1,500 1,250

2,250 2,250 2,250 2,250 2,250 2,250

2. Pam has $ 8 a day to spend on yogurt and ice cream.

Yogurt (cartons per day) 10

The price of a carton of yogurt is $1.00 and the price of an ice cream cone is $2.00 . 8

Draw Pam's budget line and label it. When Pam is on her budget line and she is consuming 4 ice cream cones, the maximum number of cartons of yogurt she can also afford is .

6

4

2

0

0

2

4

6

8

10

Ice cream (cones per day)

>>> Draw only the objects specified in the question. Yogurt (cartons per day)

Answers

10

8

6

4

2 Budget line 0

0

2

4

6

Ice cream (cones per day)

0

8

10

3. Sara's income is $20 a week. The price of popcorn is $ 5 a bag and the price of a smoothie is $4. What is the equation for Sara's budget line? (QS is the quantity of smoothies and QP is the quantity of popcorn.) A. QP = 4 − 0.8QS B. QP = 0.25 − 0.8QS C. QP = 80 + 20QS D. QP = 4 + 1.25QS Answer: A. QP = 4 − 0.8QS

4. If a household's money income changes and prices do not change, what happens to the household's real income and budget line?

French fries (servings per week) 10

The graph shows Pam's budget line.

8

When Pam's income increases, Pam's real income _______. 6

A. in terms of french fries decreases and in terms of garlic bread decreases B. increases only if the prices of garlic bread and french fries fall

4

C. in terms of french fries increases and in terms of garlic bread increases

2

D. in terms of french fries and garlic bread does not change

0

Draw Pam's new budget line when her income increases , other things remaining the same. Label the line. >>> Make sure the budget line intersects both axes.

B0 0

2

4

6

8

10

Garlic bread (servings per week)

>>> Draw only the objects specified in the question. Answers C. in terms of french fries increases and in terms of garlic bread increases French fries (servings per week) 10

8

6

4

2

0

B0 0

2

4

B1 6

8

Garlic bread (servings per week)

10

5. What is a minimum wage and what are its effects if it is set above the equilibrium wage?

Wage rate (dollars per hour) 7

A minimum wage is _______.

S 6

A. a government regulation that make it illegal to charge a price higher than a specified level

Minimum

5

wage

B. a means of increasing employment for low-skilled labour C. a price floor in the labour market

4

D. a price ceiling in the labour market The graph shows a labour market with a minimum wage of $5 an hour.

3

In the graph, when the minimum wage is set above the equilibrium wage at $5 an hour, it creates a labour ______ of ______ million hours a year.

2 18

20 19

20

22 21

22

D 23

24

Quantity (millions of hours per year)

A. surplus; 2 B. surplus; 1 C. shortage; 1 D. shortage; 2 Answers C. a price floor in the labour market A. surplus; 2

6. India steps up pressure for minimum wage for its workers in the Gulf Oil-rich countries in the [Persian] Gulf, already confronted by strong labour protests, are facing renewed pressure from India to pay minimum wages for unskilled workers. With five million immigrant workers in the region, India is trying to win better conditions for their citizens. Source: International Herald Tribune, March 27, 2008 Would migrant Indian workers be better off or worse off or unaffected by this minimum wage? A minimum wage in the Persian Gulf ______. A. makes all migrant Indian workers better off B. makes all migrant Indian workers worse off C. makes some migrant Indian workers better off and some migrant Indian workers worse off D. decreases the number of migrant Indian workers unemployed in the Persian Gulf Answer: C. makes some migrant Indian workers better off and some migrant Indian workers worse off

7. The graph shows the market for lawnmowers when a tax is imposed on sellers. Calculate the amount of consumer surplus, producer surplus, deadweight loss, and tax revenue after the imposition of the tax. Consumer surplus is $

.

Producer surplus is $

Tax revenue is $

S + tax

300

500 400 300

200 100 0

D 6 0

2

4

6

8 8

10

12

Quantity (lawnmowers per week)

Answers 900 900 200 1200

S

600

400

. .

700

500

.

The deadweight loss is $

Price (dollars per lawnmower) 800

14

16

8. If the price of one good changes, what happens to the relative price and the slope of the household's budget line?

Oranges (number per week) 10

When the price of the good measured on the x-axis falls , the relative price of the good measured on the x-axis _______ and the budget line _______.

8

A. remains the same; does not change

6

B. falls; shifts outward C. rises; becomes steeper D. falls; becomes less steep

4

The graph shows Jen's budget line. 2

Draw Jen's new budget line when the price of a banana falls. Label it.

0

B0 0

2

4

6

8

10

12

14

Bananas (number per week)

>>> Draw only the objects specified in the question. Answers D. falls; becomes less steep Oranges (number per week) 10

8

6

4

2

0

B1

B0 0

2

4

6

8

10

Bananas (number per week)

12

14

9.

Concerned about the political fallout from rising university tuition , the government decides to impose a price ceiling on tuition of $ 30,000 a student. If more universities open and drive the equilibrium price of tuition to $25,000 a student, _____. The market for university education is ______. A. neither a surplus nor a shortage of university education emerges; efficient B. a shortage of university education emerges; efficient C. a shortage of university education emerges; inefficient D. a surplus of university education emerges; inefficient E. a surplus of university education emerges; efficient Answer: A. neither a surplus nor a shortage of university education emerges; efficient

10. The figure shows Hillary's budget line. Hillary buys only cauliflowers (Y) and cabbages (X). The price of a cauliflower is $5 and the price of a cabbage is $2. Suppose Hillary's income falls by $10 a week, the price of a cauliflower decreases by $1, and the price of a cabbage increases by $2. What is the equation of Hillary's new budget line? The equation of Hillary's new budget line is _______.

Cauliflowers (number per week) 12

10

8

6

4

A. Y = 40 − 4.0X B. Y = 10 − X

2

Budget line

C. Y = 10 − 4.0X D. Y = 40 − X

0

0

5

10

15

20

Cabbages (number per week)

Answer: B. Y = 10 − X

25

30

11. Marc has a budget of $20 a month to spend on root beer and DVDs. The price of root beer is $5 a bottle, and the price of a DVD is $10 . What is the relative price of root beer in terms of DVDs and what is the opportunity cost of a bottle of root beer? The relative price of root beer in terms of DVDs is ______. A. $5 B. $10 C. 0.5 DVD per bottle D. 1.25 bottles of root beer The opportunity cost of a bottle of root beer is ______. A. 0.5 B. 2 DVDs C. $10 D. 2.0 bottles of root beer Answers C. 0.5 DVD per bottle A. 0.5

12. The table gives the demand and supply schedules for chocolate brownies. If sellers are taxed 20¢ a brownie, what is the price of a brownie and who pays the tax? The price of a brownie paid by buyers is cents. Buyers pay cents of the tax and sellers pay cents of the tax. If buyers are taxed 20¢ a brownie, what is the price of a brownie and who pays the tax? The price of a brownie paid by buyers is cents. Buyers pay cents of the tax and sellers pay cents of the tax. Answers 70 10 10 70 10 10

Price

Quantity demanded

(cents per brownie)

50 60 70 80

Quantity supplied

(millions per day)

5 4 3 2

3 4 5 6

13. The figure shows Laura's budget line. Laura buys only lilies (Y) and orchids (X).

16

The price of a lily is $4 and the price of an orchid is $7.

14

Suppose Laura's income rises by $14 a month, the price of a lily increases by $6, and the price of an orchid remains the same .

12

What is the equation of Laura's new budget line?

Lilies (number per month)

10 8

The equation of Laura's new budget line is _______. 6

A. Y = 70 − 3.0X B. Y = 7 − .7X C. Y = 70 − 6.0X

4 2

D. Y = 7 − 1.43X 0

Budget line 0

2

4

6

8

10

Orchids (number per month)

Answer: B. Y = 7 − .7X

14. Sara's income is $ 12a week. The price of popcorn is $ 3 a bag and the price of a smoothie is $ 3. What is the relative price of a smoothie? What is the opportunity cost of a smoothie? The relative price of a smoothie is ______.

The opportunity cost of a smoothie is ______.

A. $12

A. 1.0 bag of popcorn

B. $3

B. 4.0 bags of popcorn

C. 3.0 bags of popcorn

C. 1.0 smoothie

D. 1.0 bag of popcorn

D. $3

Answers D. 1.0 bag of popcorn A. 1.0 bag of popcorn

15. Explain why a minimum wage is unfair. A minimum wage is unfair because _______. A. it encourages many students to leave school before completing an adequate amount of education B. only those people who have jobs and keep them benefit from the minimum wage, and a minimum wage blocks voluntary exchange C. it creates a deadweight loss D. it should be set higher Answer: B. only those people who have jobs and keep them benefit from the minimum wage, and a minimum wage blocks voluntary exchange

16. Sara's income rises from $ 20 a week to $40 a week while the price of popcorn is unchanged at $5 a bag and the price of a smoothie is unchanged at $4 . What is the effect of the risein Sara's income on her real income in terms of smoothies and popcorn? When Sarah's income risesfrom $ 20a week to $ 40a week, Sara's real income in terms of smoothies _______. A. does not change because the price of a smoothie remains at $4 B. rises or falls, but we don't know for sure because we don't know the prices of other goods that she might want to substitute for smoothies C. rises from 5 smoothies to 10 smoothies D. rises from $ 20 a week to $ 40 a week When Sarah's income risesfrom $ 20a week to $ 40a week, Sara's real income in terms of popcorn _______. A. rises from $ 20 a week to $ 40 a week B. does not change because the price of popcorn remains at $ 5 a bag C. rises from 4 bags of popcorn to 8 bags of popcorn D. rises or falls, but we don't know for sure because we don't know the prices of other goods that she might want to substitute for popcorn Answers C. rises from 5 smoothies to 10 smoothies C. rises from 4bags of popcorn to 8 bags of popcorn

17. The graph shows the market for apartments in Moncton, New Brunswick. Suppose there is a strictly enforced $1,200 rent ceiling in this market. With the rent ceiling, the market is _____ because _____.

Rent (dollars per apartment per month) 3000 2800 2600

A. inefficient; the marginal social cost of the last apartment rented is greater than its marginal social benefit

2400

B. inefficient; the marginal social benefit from the last apartment rented is greater than its marginal social cost

2000

C. efficient; a rent ceiling gives poorer people greater access to housing D. efficient; the marginal social cost of the last apartment rented is greater than its marginal social benefit With the rent ceiling, the housing market is _______ by the fair rules view of fairness and _______ by the fair results view of fairness.

S

2200

1800 1600 1400 1200 1000

D

800 0

4

8

12

16

20

24

Quantity (thousands of apartments per month)

A. fair; unfair B. unfair; unfair C. fair; fair D. unfair; fair Answers B. inefficient; the marginal social benefit from the last apartment rented is greater than its marginal social cost B. unfair; unfair

18. The table shows the market for chocolate bars. A tax of $ 0.30 per chocolate bar is imposed on sellers. What is the new price of a chocolate bar? Who pays the tax? The new price of a chocolate bar following the tax is $ . The tax is _______. A. paid totally by the buyer B. split between the buyer and the seller C. paid totally by the seller Answers 1.50 B. split between the buyer and the seller

Price (dollars per chocolate bar)

1.10 1.20 1.30 1.40 1.50

Quantity demanded

Quantity supplied

(thousands per day)

50 40 30 20 10

5 10 15 20 25

19. Sara's income is $ 16 a week. The price of popcorn is $ 2 a bag, and the price of a smoothie is $4. Calculate Sara's real income in terms of smoothies. Calculate her real income in terms of popcorn. What is the relative price of smoothies in terms of popcorn? What is the opportunity cost of a smoothie? Sara's real income in terms of smoothies is Sara's real income in terms of popcorn is The relative price of a smoothie is ______. A. $2 B. 0.5 bag of popcorn C. $4 D. 2.0 bags of popcorn The opportunity cost of a smoothie is ______. A. 4.0 bags of popcorn B. 2.0 bags of popcorn C. 0.5 smoothie D. $4

(1)

dollars

(2)

smoothies

dollars bags of popcorn

Answers 4 (1) smoothies 8 (2) bags of popcorn D. 2.0 bags of popcorn B. 2.0 bags of popcorn

(1) (2)

. .

20. The table shows the demand and supply schedules for on-campus housing. If the college puts a rent ceiling of $350 a month on rooms, what is the rent paid, how many rooms are rented, and is the on-campus housing market efficient? If the college puts a rent ceiling on rooms of $350 a month on rooms, rent is $ and the number of rooms rented is

.

The on-campus housing market is (1)

(1)

efficient inefficient

Answers 300 2,000 (1) efficient

.

Rent (dollars per room)

250 275 300 325 350 375

Quantity demanded

Quantity supplied

(rooms)

2,500 2,250 2,000 1,750 1,500 1,250

2,000 2,000 2,000 2,000 2,000 2,000...