ECO111 FX 200

D

QN=106 (17188) Soup is an inferior good if a. The demand for soup falls when the price of a substitute for soup rises. b. The demand for soup rises when the price of soup falls. c. The demand curve for soup slopes upward. d. The demand for soup falls when income rises.

D

QN=107 (17211) Which of the following is an example of a market? a. (i) a gas station b. (ii) a garage sale c. (iii) a barber shop d. All of (i), (ii), and (iii) are examples of markets.

A

QN=109 (17195) 5. Refer to Table 4-7. Suppose Charlie, Maxine, and Quinn are the only demanders of sandwiches. Also suppose the following: • x = 2 • the current price of a sandwich is $3.00 • the market quantity supplied of sandwiches is 5 • the slope of the supply curve is 1 Then a. there is currently a shortage of 5 sandwiches and the equilibrium price of a sandwich is between $3.00 and $5.00. b. there is currently a shortage of 5 sandwiches and the equilibrium price of a sandwich is $5.00. c. there is currently a surplus of 5 sandwiches and the equilibrium price of a sandwich is between $3.00 and $5.00. d. there is currently a surplus of 5 sandwiches and the equilibrium price of a sandwich is $5.00.

A

QN=112 (17221) Which of the following would not shift the demand curve for mp3 players? a. a decrease in the price of mp3 players b. a trend that makes mp3 players more popular among 12-25 year olds c. an increase in the price of CDs, a complement for mp3 players d. a decrease in the price of satellite radio, a substitute for mp3 players

A

QN=117 (17238) Most economists report the elasticity of demand as a. the absolute value of the actual number. b. a negative number, since price and quantity demanded move in opposite directions. c. a percentage, since both the numerator and denominator are percentages. d. a dollar amount, since we are measuring the change in price.

A

QN=119 (17258) Income elasticity of demand measures how a. the quantity demanded changes as consumer income changes. b. consumer purchasing power is affected by a change in the price of a good. c. the price of a good is affected when there is a change in consumer income. d. many units of a good a consumer can buy given a certain income level.

C

QN=12 (17146) Russell spends an hour studying instead of playing tennis. The opportunity cost to him of studying is a. the improvement in 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. zero. Since Russell chose to study rather than to play tennis, the value of studying must have been greater than the value of playing tennis.

A

QN=132 (17242) When the price of a good is $5, the quantity demanded is 120 units per month; when the price is $7, the quantity demanded is 100 units per month. Using the midpoint method, the price elasticity of demand is about a. 0.55. b. 1.83. c. 2. d. 0.45

A

QN=150 (17231) Elasticity is a. a measure of how much buyers and sellers respond to changes in market conditions. b. the study of how the allocation of resources affects economic well-being. c. the maximum amount that a buyer will pay for a good. d. the value of everything a seller must give up to produce a good.

D

QN=166 (17272) When a binding price floor is imposed on a market a. (i) price no longer serves as a rationing device. b. (ii) the quantity supplied at the price floor exceeds the quantity that would have been supplied without the price floor. c. (iii) only some sellers benefit. d. All of (i), (ii), and (iii) are correct.

C

QN=175 (17284) If a price floor is a binding constraint on a market, then a. the equilibrium price must be above the price floor. b. the quantity demanded must exceed the quantity supplied. c. sellers cannot sell all they want to sell at the price floor. d. buyers cannot buy all they want to buy at the price floor.

B

QN=182 (17299) When a tax is placed on the sellers of a product, a. buyers pay more and sellers receive more than they did before the tax. b. buyers pay more and sellers receive less than they did before the tax. c. buyers pay less and sellers receive more than they did before the tax. d. buyers pay less and sellers receive less than they did before the tax.

C

QN=190 (17296) Minimum-wage laws dictate the a. average price employers must pay for labor. b. highest price employers may pay for labor. c. lowest price employers may pay for labor. d. the highest and lowest prices employers may pay for labor.

C

QN=197 (17336) 2. Refer to Figure 7-2. When the price is P1, consumer surplus is a. A. b. A+B. c. A+B+C. d. A+B+D.

B

QN=2 (17122) Mitch has $100 to spend and wants to buy either a new amplifier for his guitar or a new mp3 player to listen to music while working out. Both the amplifier and the mp3 player cost $100, so he can only buy one. This illustrates the basic concept that a. trade can make everyone better off. b. people face trade-offs c. rational people think at the margin. d. people respond to incentives.

B

QN=208 (17330) Which of the Ten Principles of Economics does welfare economics explain more fully? a. The cost of something is what you give up to get it. b. Markets are usually a good way to organize economic activity. c. Trade can make everyone better off. d. A country's standard of living depends on its ability to produce goods and services.

A

QN=209 (17333) Externalities are a. side effects passed on to a party other than the buyers and sellers in the market. b. side effects of government intervention in markets. c. external forces that cause the price of a good to be higher than it otherwise would be. d. external forces that help establish equilibrium price.

C

QN=24 (17115) In a market economy, who makes the decisions that guide most economic activities? a. firms only b. households only c. firms and households d. government A

C

QN=248 (17384) Refer to Figure 10-7. Which quantity represents the social optimum for this market? a. Q1. b. Q2. c. Q3. d. Q4.

B

QN=269 (17347) An externality is a. the costs that parties incur in the process of agreeing and following through on a bargain. b. the uncompensated impact of one person's actions on the well-being of a bystander. c. the proposition that private parties can bargain without cost over the allocation of resources. d. a market equilibrium tax.

A

QN=274 (17353) Externalities tend to cause markets to be a. inefficient. b. unequal. c. unnecessary. d. overwhelmed.

D

QN=37 (17162) An economic theory about international trade that is based on the assumption that there are only two countries trading two goods a. is useless, since the real world has many countries trading many goods. b. can be useful only in situations involving two countries and two goods. c. can be useful in the classroom, but is useless in the real world. d. can be useful in helping economists understand the complex world of international trade involving many countries and many goods.

B

QN=40 (17164) The slope of a steep upward-sloping line will be a a. small positive number. b. large positive number. c. small negative number. d. large negative number.

D

QN=46 (17152) Refer to Figure 2-2. Malika works as an attorney for a corporation and is paid a salary in exchange for the legal services she performs. Jarel owns office buildings and rents his buildings to companies in exchange for rent payments. If Malika's income is represented by a flow of dollars from Box D to Box B of this circular-flow diagram, then Jarel's income is represented by a flow of dollars a. from Box A to Box C. b. from Box C to Box A. c. from Box B to Box D. d. from Box D to Box B.

B

QN=6 (17130) An increase in the overall level of prices in an economy is referred to as a. economic growth. b. inflation. c. monetary policy. d. supply shocks. A

C

QN=66 (17178) Economists build economic models by a. generating data. b. conducting controlled experiments in a lab. c. making assumptions. d. reviewing statistical forecasts.

D

QN=75 (17209) Who gets scarce resources in a market economy? a. the government b. whoever the government decides gets them c. whoever wants them d. whoever is willing and able to pay the price

D

QN=79 (17224) What will happen to the equilibrium price of new textbooks if more students attend college, paper becomes cheaper, textbook authors accept lower royalties, and fewer used textbooks are sold? a. Price will rise. b. Price will fall. c. Price will stay exactly the same. d. The price change will be ambiguous.

C

QN=88 (17189) A movement downward and to the left along a supply curve is called a. an increase in supply. b. a decrease in supply. c. a decrease in quantity supplied. d. an increase in quantity supplied.

A

QN=94 (17196) In a market economy, supply and demand determine a. both the quantity of each good produced and the price at which it is sold. b. the quantity of each good produced, but not the price at which it is sold. c. the price at which each good is sold, but not the quantity of each good produced. d. neither the quantity of each good produced nor the price at which it is sold. C