ECO 2013 Final Exam Study Guide
Suppose that a customer's willingness to pay for a product is $79, and the seller's willingness to sell is $64. If the negotiated price is $68 how much is the consumer surplus? a) $4 b) $11 c) $15 d) $21
b) $11
If the government prevented prices from falling to their equilibrium levels, there would be: a) a shortage b) a surplus c) a price ceiling d) an equilibrium price
b) a surplus
The purpose of an economic model is to:
demonstrate which values and beliefs are the best for the economy
A shift in demand is defined as a change in the:
quantity demanded at any given any price
The result of government intervention in the market is that:
society may be worse off
To answer the question of how the goods and services are to be produced, society must decide: a) what products to export b) what products government wants c) how to combine its scarce resources to produce the desired products d) what products businesses want to produce
?
A change in quantity supplied is the result of:
a change in the price of a good
If you are willing to sell an old bicycle for $30, but someone offers $40 for it, the result of the transaction would yield: a) $10 worth of producer surplus and unknown consumer surplus b) $30 worth of consumer surplus and $10 worth of producer c) $30 worth of producer surplus and $10 worth consumer surplus d) $10 worth of consumer surplus and unknown producer surplus
a) $10 worth of producer surplus and unknown consumer surplus
To calculate market supply we: a) add the quantities supplied for each individual supply schedule horizontally
a) add the quantities supplied for each individual supply schedule horizontally
Consumer surplus is defined as the: a) gap between the demand curve and the market price b) gap between the supply curve and the market price c) the difference between the supply curve and the market price d) the difference between the price ceiling and the market price
a) gap between the demand curve and the market price
___________ occur(s) when goods are produced at the lowest possible cost, and ______ occur(s) when individuals who desire a product the most receive those goods and services. a) production efficiency; allocative efficiency b) production possibilites; allocative possibilites c) allocative possibilites; production possibilites d) allocative efficiency; production efficiency
a) production efficiency; allocative efficiency
When effective price ceilings are set for a market: a) quantity demanded will be less than the equilibrium quantity, and price will be less than the equilibrium price
a) quantity demanded will be less than the equilibrium quantity, and price will be less than the equilibrium price
Other things remaining the same, an increase in the price of Chevrolets will cause the demand for Ford to: a) shift to the right b) shift to the left c) remain unchanged d) move up and down along the same curve
a) shift to the right
A market is said to be in equilibrium when: a) demand is fully satisfied at all alternative prices b) the buying intentions of all consumers are realized c) the supply intentions of all sellers are realized d) the quantity demanded equals the quantity suppled
b) the buying intentions of all consumers are realized
Ceteris paribus, which of the following can change without shifting demand? a) expectations b) income c) the prices of other related goods d) the price of the good itself
b) the price of the good itself
Given a downward-sloping market demand curve for product X, if the price of X is reduced from $10 to $8, then, ceteris paribus: a) demand for X will increase b) the quantity demanded of X will increase c) demand for X will decrease d) the quantity demanded of X will decrease
b) the quantity demanded of X will increase
Economists make a distinction between changes in quantity supplied and changed in supply: a) because the supply curve shifts whenever there is a change in quantity supplies b) to distinguish a movement along a supply curve from a shift in the supply c) because the demand curve shifts whenever there is a change in quantity supplied d) to distinguish a supply shift from a demand shift
b) to distinguish a movement along a supply curve from a shift in the supply
Economics is a social science that involves the study of how individuals, firms, and societies: a) maximize happiness b) maximize income c) choose among alternatives to satisfy their unlimited wants d) develop their tastes and preference
c) choose among alternatives to satisfy their unlimited wants
Land: a) is not a scarce resource b) earns rent c) earns interest d) is only used for agriculture
c) earns interest
A single proprietorship is a form owned by: a) a small number of individuals who are liable for the firm's debt and obligations b) many people who own shares (stocks) of the firm, but who are not liable for the firm's debt c) one individual who is liable for the firm's obligations and debt d) another firm or corporation
c) one individual who is liable for the firm's obligations and debt
An effective price ceiling results in black-market pressures to: a) reduce prices because of surpluses b) raise prices because of surpluses c) raise prices because of shortages d) reduce prices because of shortages
c) raise prices because of shortages
In economics, what does scarcity mean? a) that when there is a shortage of a particular good, the price will fall b) that a production-possibilities curve cannot accurately represent the tradeoff between two goods c) that society's desires exceed the want-satisfying capability d) that the market mechanism has failed
c) that society's desires exceed the want-satisfying capability
Which of the following is the best example of land? a) the ethanol refined from corn b) a factory that produces new goods and services c) the river water used to float a riverboat casino d) a barber's chair
c) the river water used to float a riverboat casino
An institution that enables buyers and sellers to interact and transact with one another is known as a(n): a) bank b) economy c) stock exchange d) market
d) market
Reasons to study economics include all of the following, EXCEPT that you: a) will always live in a world of scarcity and choices b) will understand more about how government and businesses interact c) may become a better informed voter d) will learn exactly how to invest your cash short-term for the highest return on investment
d) will learn exactly how to invest your cash short-term for the highest return on investment
Suppose that the price of pork rises. We would expect that the supply of beef will:
fall because farmers will shift resources from beef production to pork production
According to the law of demand, the quantity of a good demanded in a given time period:
increases as its price falls, ceteris paribus
An item whose demand rises and people's incomes fall is known as a(n) _________ good
inferior
A theory composed of a number of assumptions and facts boiled down to their basic relevant elements is called a:
model
The Latin phrase ceteris paribus means:
other things remain equal
According to economists, investment includes:
output which is used to produce output
A study by the Organization for Economic Co-operation and development (OECD) on factors driving economic growth finds per capita GDP is:
positively affected by lower inflation rates
Productivity:
rises when the ratio of output to input increases
The purpose of invoking ceteris paribus is to:
simplify the analysis being done
When economists talk about "optimal outcomes" in the marketplace, they mean that:
the allocation of resources by the market is likely to be the best possible, given scarce resources and income constraints
A decrease in available resources would cause:
the production-possibilities frontier to shift inward
The fundamental problem of economics is:
the scarcity of resources relative to human wants
The goals of market participants include the maximization of:
utility, profits, and the general welfare of society
The term opportunity costs refers to the:
value of the best option given up when a good or service is produced
