EC 111

the terms equality and efficiency are similar in that they both refer to benefits to society, however, they are different in that..

equality refers to uniform distribution of those benefits and efficiency refers to maximizing benefits from scarce recourses

which of the following might cause the supply curve for an inferior good to shift to the right? A. an increase in consumer income B. a decrease in consumer income C. an improvement in production technology that makes production of the good more profitable D. a decrease in the number of sellers in the market

B. a decrease in consumer income

the payment to the factor of production land is called A. motgage B. rent C. interest D. profit

A mortgage

the amount of a good or service that buyers would be willing and able to purchase at a specific price is known as A. quantity demanded B. demand C. supply D. quantity supplied

A quantity demanded

is a 2% rise in price leads to a 4% decrease in quantity demanded, then price elasticity of demand is: A. 2 and therefor elastic B. 0.5 and therefore inelastic C. 2 and therefore inelastic D. 0.5 and therefore elastic

A. 2 and therefore elastic

if consumers view cappuccinos and lattes as substitues, what would happen to the equilibrium price and quantity of lattes is the price of cappuccinos rises? A. both the equilibrium price and quantity would increase B. both the equilibrium price and quantity would decrease C. the equilibrium quantity would increase but the equilibrium price would be uncertain D. the equilibrium price would increase but the equilibirum quantity would be incertain

A. Both the equilibrium price and quantity would increase

Suppose alabama 2012 national champions tshirts are currently selling for $15, but the uqilibrium price of the t-shirts is $20. we would expect: A. a shortage and the market price of the t-shirts to increase B. a shortage and the market price of t-shirts to decrease C. a surplus and the market price of the t-shirts to increase D. a surplus and the market price of t-shirts to decrease

A. a shortage and the market price of the t-shirts to increase

in which of these instances is demand said to be perfectly inelastic A. an increase in price of 2% causes a decrease in quantity demanded of 2% B. a decrease in price of 2% causes in increase in quantity demanded of 0% C. a decrease in price of 2% causes a decrease in total revenue of 0% D. an increase in price of 2% causes a decrease in quantity demanded of 1%

A. an increase in price of 2% causes a decrease in quantity demanded of 2%

a supply curve slopes upward bc: A. as more is produced, total cost of prduction falls B. an increase in input prices increases supply C. the quantity supplied of most goods and services increases over time D. an increase in price gives producers and incentive to supply a larger quantity

A. as more is produced, total cost of production falls

Which of the following answers most accurately describes the role played by hosueholds in the circular flow model? A. households own the factors of produciton and they buy goods and services B. households buy the factors of production and they sell goods and services C. households use factors of production to produce and they buy goods and services D. households sell factors of production and they sell goods anf services

A. households own the factors of production and they buy goods and services

in general, a relatively flat demand curve is more likely to be A. price elastic B. price inelastic C. unit price elastic D. perfectly inelastic

A. price elastic

when we compare an increase in supply with an increase in quantity supplied, we know that A. the former is depicted by a movement along the supply curve and the latter is depicted by a shift of the supply curve B. the former could be caused by a decrease in input costs and the latter would be caused by an increase in the price of the good C. both are always caused by an increase in the price of the good itself D. both are always caused by a change in demand

A. the former is depicted by a movement along the supply curve and the latter is depicted by a shift of the supply curve

on a production possibilities graph, production is inefficient if A. the production point is inside the fronteir B. the production point is outside the frontier C. the production point is on the frontier D. the production point is on or inside the frontier

A. the production point is inside the frontier

inelastic

not sensitive to changes in price; necessities -small change in price will have a large change in quantity -vertical demand curve

if butter and toast are complements, then which of the following would increase the demand for toast A. a decrease in the price of toast B. a decrease in the price of butter C. an increase in the price of butter D. both a and b are correct

B. a decrease in the price of butter

which of the following would shift the current demand curve for gasoline to the right? A. a decrease in the price of gasoline B. a decrease in the price of cars and trucks C. a decrease in the expected future price of gasoline D. a decrease in the consumer income, assuming gasoline is a normal good

B. a decrease in the price of cars and trucks

Coach nick saban consumes little debbies oatmeal cream snacks with his coffee every morning. if there is a large increase in the price of coffee, the coach saban's: A. demand curve for coffee would shift to the right B. demand curve for little debbie's oatmeal cream snacks would shift to the left C. demand curve for little debbie's oatmeal cream snacks would shift to the right D. demand curve for coffe would shift to the left

B. demand curve for little debbie's oatmeal cream snacks would shift to the left

in the circular flow diagram, A. taxes flow from households to firms and transfer payments flow from firms to households B. income payments flow from firms to households and sales revenue flows from households to firms C. factors of production flow from firms to households and goods and services flow from firms to households D. inputs and outputs flow in the same direction as the flow of dollars, from firms to households

B. income payments flow from firms to households and sales revenue flows from households to firms

if levi jeans co .raises the price of its jeans from 25 to 30 and finds that consumer decrease their quantity demanded from 750 to 600 pairs of jeans, then the demand for levi jeans wihin this price range is A. price inelastic B. price elastic C. unit elastic D. perfectly inelastic

B. price elastic

In production of goods and services, tradeoffs exist bc A. buyers and sellers often negotiate prices B. society has only a limited amount of productive resources, which is called scarcity C. not all production is efficient D. human wants and needs are limited at a particular point in time

B. society has only a limited amount of productive resources, which is called scarcity

a massive drought in california destroys much of the nations grapefruit crop. the devastation causes the: A. supply curve for grapefruit juice to the left, causing the price of grapefruit juice to fall B. supply curve for grapefruit juice to shift to the left, causing the price of grapefruit juice to rise C. supply curve for grapefruit juice to shift to the right, causing the price of grapefruit juice to rise D. supply curve for grapefruit juice to shift to the right, causing the price of grapefruit juice to fall

B. supply curve for grapefruit juice to shift to the left, causing the price of grapefruit juice to rise

if bottled water is considered a normal good then as consumers incomes rise, A. the demand for bottle water will shift to the left B. the demand for bottle water will shift to the right C. the quantity demanded for bottle water will increase D. the quantity demanded for bottle water will increase

B. the demand for bottle water will shift to the right

what demonstrates the law of demand

Busch gardens lowered the price of admission for the month of may, attendance increased at the park in may

the midpoint method is used to calculate elasticity bc it: A. automatically computes a positive number instead of a negative number B. results in an elasticity that is the same as the slope of the demand curve C. gives the same elasticity regardless of the direction of the price change D. automatically restricts all elasticity values between 0 and 1

C gives the same elasticity regardless of the direction of the price change

Which of the following is NOT illustrated by the production possibilities frontier? A. efficiency B. opportunity cost C. Equality D. Tradeoffs

C. Equality

which statement is correct A. The demand for gasoline is more elastic over a shorter period of time than over a long period of time B. the demand for diamond rings is less elastic than the demand for basic groceries C. The demand for bourbon whiskey is more elastic than the demand for alcoholic beverages in general D. The demand for pepsi cola is less elastic than the demand for salt

C. The demand for bourbon whiskey is more elastic than the demand for alcoholic beverages in general

an improvement in technology is shown on the production possibility frontier as: A. the curvature of the PPF B. an inward shift in the PPF C. an outward shift in the PPF D. a movement from one point on the PPF to another

C. an outward shift in the PPF

a movement downward along a demand curve is called A. a decrease in demand B. a decrease in quantity demanded C. an increase in quantity demanded D. a shift of the demand curve

C. and increase in quantity demanded

suppose the incomes of buyers in a market for a particular normal good decrease and there is also a reduction in input prices. what would we expect to occur in this market? A. Equilibrium price would decrease, but the impact on equilibrium quantity would be unknown B. Equilibrium price would increase, but the impact on equilibrium quantity would be unknown C. equilibrium quantity would decrease, but the impact on equilibrium price would be unknown D. equilibrium quantity would increase, but the equilibrium price would be unknown

C. equilibrium quantity would decrease, but the impact on equilibrium price would be unknown

Which of the following is a positive statement (fact based) A. gas prices should be lower than what they are now B. the federal govt should rasie taxes on the wealthy C. Higher gas prices will reduce gas consumption D. if welfare payments decrease, the us will be a better place

C. higher gas prices will reduce gas consumption

benefits from trade would NOT include: A. the ability of people and nations to specialize B. a greater variety of goods and services becoming avaliable C. less competition D. lower prices

C. less competition

Russell spends an hour studying instead of playing tennis. the opportunity cost to him of studying is A. the improvement of his grades from studying for the hour B. the improvement in his grades from studying minus the enjoyment of playing tennis C. the enjoyment and exercise he would have received had he played tennis D. nothing bc you cannot measure the tradeoff between studying and playing tennis

C. the enjoyment and exercise he would have received had he played tennis

General motors announces that next month it will offer 2000 rebates on new chevy volts. as a result of this info, todays demand curve for volts.. A. shifts to the right B. shifts to the left C. will not shift; the demand curve will shift to the right next month D. Will not shift; rather, a downward movement along the demand curve for chevy volts occurs

C. will not shift; rather, the demand curve will shift to the right next month

The elasticities for a good that has very few substitutes (1) and for a good that is considered a necessity (2) will A. be elastic for 1, inelastic for 2 B. inelastic for 1 and perfectly inelastic for 2 C. be perfectly elastic for 1 and perfectly inelastic for 2 D. be inelastic for both 1 and 2

D be inelastic for both 1 and 2

Which of the following events would cause the price of orange juice to rise in the US A. there is a surplus of oranges in the US B. due to favorable weater patters, there is a large increase in grapefruit production in the us, which in turn increases the supply of grapefruit juice C. the price of land throughout florida decreases and florida produces a significant amount of the US's oranges D. The U.S food and drug administration announces that consuming more vitamin C lowers your risk of getting certain types of cancer

D. The U.S food and drug administration announces that consuming more vitamin C lowers your risk of getting certain types of cancer

a rise in the price of coke is likely to have which of the following initial effects on the market for pepsi, a substitute A. a upward movement along the pepsi demand curve B. a downward movement along the pepsi demand curve C. a leftward shift in the pepsi demand curve D. a rightward shift in the pepsi demand curve

D. a rightward shift in the pepsi demand curve

the principle of increasing opportunity cost is consistent with a production possibilities frontier that is A. a straight line B. bowed inward C. upward sloping D. bowed outward

D. bowed outward

a market demand curve shows A. the relationship between supply and the number of buyers in a market B. how price changes when the number of buyers changes C. the sum of all prices that individual buyers are willing and able to pay for each possibly quantity of the good D. how much of a good all buyers in the market are willing and able to purchase at each possible price

D. how much of a good all buyers in the market are willing and able to purchase at each possible price

A city wants to raise revenue to build a new municipal swimming pool next year. the mayor suggests that the city raise the price of admission to the current municipal pool this year to raise revenue. the city manager suggests that the city lowers the price of admission to raise revenue. Who is correct? A. both the mayor and city manager would be correct if demand were price elastic B. Both the mayor and city manager would be correct if demand were price inelastic C. the mayor would be correct if demand were price elastic and the city manager would be correct if demand were price inelastic D. The mayor would be correct if demand were price inelastic and the city manager would be correct if demand were price elastic

D. the mayour would be correct if demand were price inelastic and the city manager would be correct if demand were price elastic

which is NOT a determinant of demand? A. the price of related goods such as complimentary goods B. income C. tasts and preferences D. the number of firms in the market

D. the number of firms in the market

Which of the following would cause a movement upward along the supply curve for mangos A. the number of farmers growing mangos increases B. there is an advance in technology that reduces the cost of producing mangos C. the price of fertilizer and pesticide decreases and these are inputs in the production of mangos D. the price of mangos rises in the market

D. the price of mangos rises in the market

which of the following is an example of a demand curve that is perfectly horizontal, meaning the elasticity of demand is perfectly elastic A. insulin B. gasoline C. bryant denny stadium D. the seafood caught in the gulf of mexico by zirlotts father

D. the seafood caught in the gulf by zirlotts father

suppose there is an increase in the price of steel. we would expect the supply curve for steel A. to shift rightward B. to shift leftward C. to become flatter D. to remain unchanged but the quantity supplied of steel will increase

D. to remain unchanged but the quantity supplied of steel will increase

elasticity formulaa

n=(quantity new-quanity old)/(quantity new+quantity old) all divided by (price new - price old)/(price new + price old)

equilibrium price must decrease when demand...

increases and supply does not change, and when demand does not change and supply decreases, demand increases and and supply decreases simultaneously

elastic

sensitive to changes in price or income; not necessities -raising prices will always cause total revenue to increase -horizontal demand curve

remember*

whenever the absolute value of demand is greater than one, price decreases will increase revenue