ECON Test 1 HW Questions Review

A demand curve illustrates the Select one: a. total cost for producing one more unit. b. marginal benefit for consuming one more unit. c. total benefit for consuming one more unit. d. marginal cost for producing one more unit.

The correct answer is: marginal benefit for consuming one more unit.

Cotton is a normal good. All else equal, when the economy went into recessionary periods during the early 1800s, the demand for cotton Select one: a. increased, increasing producer surplus in the market for cotton. b. decreased, increasing producer surplus in the market for cotton. c. decreased, decreasing producer surplus in the market for cotton. d. None of the above.

The correct answer is: decreased, decreasing producer surplus in the market for cotton.

During the American Revolutionary War, the British counterfeited large numbers of Continentals. All else equal, this caused the equilibrium price-level for Continentals to Select one: a. decrease, and the equilibrium quantity of Continentals to increase. b. increase, and the equilibrium quantity of Continentals to increase. c. decrease, and the equilibrium quantity of Continentals to decrease. d. None of the above.

The correct answer is: increase, and the equilibrium quantity of Continentals to increase.

During the first period of colonization into America, most indentured servants were Select one: a. male slaves. b. female slaves. c. children slaves. d. None of the above.

The correct answer is: None of the above.

Refer to Figure 1.1 above. Consumer surplus in the market above, with no tax, equals Select one: a. area "d + e + f" b. area "a + b + c" c. area "a" d. area "f"

The correct answer is: area "a + b + c"

Refer to Figure 1.1 above. Producer surplus in the market above, with a per unit tax of P1 minus P3, equals Select one: a. area "a" b. area "a + b + c" c. area "f" d. None of the above.

The correct answer is: area "f"

Given upward sloping supply and downward sloping demand, a $1 excise tax on any good or service causes the price buyers pay to increase by Select one: a. more than $1. b. less than $1. c. exactly $1. d. Any of the above could be true.

The correct answer is: less than $1.

In a competitive labor market, if the wage is lower than the equilibrium wage, Select one: a. unemployment exists, and the wage must rise. b. unemployment exists, and the wage must fall. c. a shortage of workers exists, and the wage must fall. d. a shortage of workers exists, and the wage must rise.

The correct answer is: a shortage of workers exists, and the wage must rise.

Suppose that new discoveries of valuable resources in America increased the demand for indentured servants. Holding cost of the voyage and other things the same, newly immigrating indentured servants' labor terms (years of service) Select one: a. not change. b. increase. c. change uncertainly. d. decrease.

The correct answer is: decrease.

The Sugar Act of 1764 placed new excise taxes on wine in the colonies. In the market for wine, this act caused consumer surplus to Select one: a. decrease, and producer surplus to decrease. b. decrease, and producer surplus to increase. c. increase, and producer surplus to increase. d. increase, and producer surplus to decrease.

The correct answer is: decrease, and producer surplus to decrease.

During the early 1800s, the construction of canals caused the price that sellers received for goods to Select one: a. increase, and total surplus in these markets to increase. b. decrease, and total surplus in these markets to decrease. c. increase, and total surplus in these markets to not change. d. decrease, and total surplus in these markets to increase.

The correct answer is: increase, and total surplus in these markets to increase.

Early during the Industrial Revolution, unskilled and skilled labor were complements of production. All else equal, a decrease in the wages paid to unskilled labor caused the equilibrium wage for skilled labor to Select one: a. decrease. b. not change. c. change uncertainly. d. increase.

The correct answer is: increase.

In the market for textiles, increased specialization from the Industrial Revolution caused consumer surplus to Select one: a. increase, and producer surplus to increase. b. increase, and producer surplus to change uncertainly. c. increase, and producer surplus to decrease. d. change uncertainly, and producer surplus to increase.

The correct answer is: increase, and producer surplus to change uncertainly.

Before the Civil War, plantations were perfectly price discriminating monopsonies. After the Civil War, they became one-wage monopsonies. Total surplus in the market for labor Select one: a. did not change. b. decreased. c. increased. d. changed uncertainly.

The correct answer is: decreased.

Eli Whitney's invention of the cotton gin, in the short run, caused consumer surplus in the market for slave labor to Select one: a. decrease. b. change uncertainly. c. not change. d. increase.

The correct answer is: increase.

Refer to Figure 3.3 above. Plantations' breeding of slaves increased the supply of labor. Given perfect price discrimination by plantations, this increase in supply caused producer surplus to increase by Select one: a. e + f + g b. $0 c. d + g + e + f d. b + c + d

The correct answer is: $0

Refer to Figure 3.4 above. Before the Civil War, plantation owners earned what area in economic welfare? Select one: a. area "a + b + c + d". b. area "a + b + c + e + f". c. area "a + b + c + d + e + f + g + h + i". d. None of the above.

The correct answer is: area "a + b + c + d + e + f + g + h + i".

Refer to Figure 3.4 above. Suppose the graph above depicts a one-wage monopsony after the Civil War, such as a textile mill in the South. The firm pays a wage equal to Select one: a. Wc, and producer surplus equals zero. b. Wa, and producer surplus equals area "e + f + g + h + i". c. Wb, and producer surplus equals area "h + i". d. None of the above.

The correct answer is: None of the above.

In the long run, technological advances that increase worker productivity cause the demand for labor to Select one: a. increase. b. not change. c. decrease. d. change uncertainly.

The correct answer is: change uncertainly.

Refer to Table 3.6 above. Suppose a one-wage monopsony may sell its output for $2 each. The profit maximizing quantity of labor that a one-wage monopsony hires equals Select one: a. 5. b. 8. c. 6. d. 7.

The correct answer is: 6.

The invention of the steam boat caused the price that plantations received for cotton to Select one: a. increase, causing the demand for slaves to increase. b. decrease, causing the demand for slaves to decrease. c. increase, causing the demand for slaves to decrease. d. None of the above.

The correct answer is: increase, causing the demand for slaves to increase.

Which of the following temporarily resolved the issue of whether states joined the Union as free or slave? Select one: a. The Annexation Act of 1800 b. The Compromise of 1850 c. The Great Treaty of 1845 d. The Compromise of 1820

The correct answer is: The Compromise of 1820

Before the Civil War, President __________ did little to stop southern secession from the Union, which increased the demand for slavery in southern states. Select one: a. James Buchanan b. James Monroe c. Jefferson Davis d. Donald Trump

The correct answer is: James Buchanan

Refer to Figure 4.1 above. Suppose the South trades with the rest of the world. The full implementation of the Anaconda Plan, during the Civil War, causes Southern producer surplus to Select one: a. decrease by area "b + c + d" b. increase by area "a + b" c. decrease by area "b + c" d. None of the above.

The correct answer is: decrease by area "b + c + d"

Refer to Figure 4.2 above. The world price equals PC, and this country trades with the rest of the world. Domestic producer surplus equals Select one: a. area "g", and this country imports the good. b. area "g", and this country exports the good. c. area "c + d + g", and this country exports the good. d. None of the above.

The correct answer is: area "g", and this country imports the good.

Suppose the world price for widgets is higher than the domestic price. If the country opens to free world trade, domestic consumer surplus in the widgets market will Select one: a. decrease, and domestic producer surplus will decrease. b. increase, and domestic producer surplus will decrease. c. increase, and domestic producer surplus will increase. d. decrease, and domestic producer surplus will increase.

The correct answer is: decrease, and domestic producer surplus will increase.