Foldvary Final Guide 8.

____ 1. After much consideration, you have chosen Cancun over Ft. Lauderdale for your Spring Break trip this year. For this decision to change, which of the following must occur?

____ 2. The "invisible hand" directs economic activity through

____ 3. In a circular-flow diagram,

____ 4. Refer to Figure. What is the opportunity cost to society of moving from point B to point D?

____ 5. Suppose that a worker in Radioland can produce either 4 radios or 1 television per year, and a worker in Teeveeland can produce either 2 radios or 4 televisions per year. Each nation has 100 workers. Also suppose that each country completely specializes in producing the good for which it has a comparative advantage. If Radioland trades 100 radios to Teeveeland in exchange for 100 televisions each year, then each country's maximum consumption of new radios and televisions per year will be

____ 6. There are very few, if any, good substitutes for motor oil. Therefore,

____ 7. Refer to Figure 5-3. If price falls in the A range of the demand curve we can expect total revenue to

____ 8. Suppose that 50 candy bars are demanded at a particular price. If the price of candy bars rises by 4 percent, the number of candy bars demanded falls to 46 candy bars. According to the midpoint method, this means that the

____ 9. The cross-price elasticity of demand can tell us whether goods are

____ 10. A $2.00 tax placed on the sellers of mailboxes will shift the supply curve

____ 11. Normative analysis refers to what

____ 12. If you pay a price exactly equal to your willingness to pay, then

____ 13. A demand curve reflects each of the following EXCEPT the

____ 14. Refer to Table. If the price of Vanilla Coke is $6.90, who will purchase the good?

____ 15. Refer to Figure. Which area represents producer surplus at a price of P1?

____ 16. Refer to Figure. Sellers whose costs are less than price are represented by segment

____ 17. Refer to Figure. If price were higher than Pe,

____ 18. Refer to Figure. Producer surplus before the tax equaled

____ 19. Refer to Figure. If this country allows free trade in wagons

____ 20. Refer to Figure. Before the tariff is imposed government revenue is equal to

____ 21. Refer to Figure. If trade in shoes is allowed in Korea,

____ 22. Refer to Figure. The price and quantity demanded of cheese in Wales after trade would be

____ 23. A tariff on a product makes domestic sellers

____ 24. When President Bush imposed a tariff on imported steel, economists estimated it would

____ 25. Significant, important, market failures can be or are often caused by

____ 26. Suppose that a steel factory emits a certain amount of air pollution and which constitutes a negative externality. If the firms are not required to internalize this externality,

____ 27. Many times the problems of externalities are solved by each of the following EXCEPT

____ 28. If everyone benefits and receives utility from helping the poor,

____ 29. The Tragedy of the Commons will be evident when a growing number of sheep grazing on the town commons leads to a destruction of the grazing resource. To correct for this problem, the

____ 30. The pollution of water and air

____ 31. Why is the commercial value of ivory a threat to the elephant, while the commercial value of beef is the cow's guardian?

____ 32. When deciding whether to hire an additional worker, firms look at how the additional worker would affect

____ 33. In the island of Zdrastvuychye, one person has all the wealth and the other two people have nothing. In the island of Magyarposta, one person has all the wealth and the other three persons have nothing. Which, if any, is more unequal?

____ 34. The shape of the value-of-marginal-product curve is most easily explained by

____ 35. Refer to Figure. The shift of the labor supply curve from S1 to S2 could possibly be explained by

____ 36. A change in supply of one factor of production

____ 37. The ownership of human capital

____ 38. From the perspective of market demand, human capital investment is reflected

____ 39. A college degree makes a person more productive according to

____ 40. Comparison of the measures for household income distribution among countries reveals the

____ 41. Inequality in the United States has recently been

____ 42. The Gini coefficient

____ 43. Taxing the rich at a greater rate than taxing the poor is associated with which philosophy?

____ 44. A consumer is currently consuming some of good X and some of good Y. If good Y is a normal good for this consumer, a rise in consumer income will definitely cause

____ 45. The substitution effect from an increase in wages is evident in

____ 46. Three longtime friends-Sam, Diane, and Cliff-are deciding how they will spend their Saturday evening. They all agree that they should do one of three things: go to a movie, go to a concert, or go out to dinner. They also agree that they will have two pairwise votes to determine how to spend their evening, with the majority determining the outcome on each vote. The first, second, and third choices for each person are as indicated in the table below.

If (1) the first vote pits "dinner" against "concert," and (2) the second vote pits "movie" against the winner of the first vote, then

____ 47. The citizens of Paradoxopolis will decide whether to build a new school, build a new park, or build a new road. Exactly one of the three choices will prevail, and the choice will be made by way of pairwise voting, with the majority determining the outcome on each vote. The preferences of the voters are summarized in the table below.

Refer to Table 22-2. If (1) the first vote pits "school" against "park," and (2) the second vote pits "road" against the winner of the first vote, then the outcome is as follows:

____ 48. Five voters will decide which of four outcomes (W, X, Y or Z) they will choose. Their preferences are summarized in the following table:

If the vote were conducted according to a modified Borda count system where each person's first choice receives 10 points, second choice 5 points, third choice 3 points and fourth choice 1 point, the result would be

Bonus 12 pt. question: Is the concept of a pure free market an ethical concept? Explain.