ECON 2005 Exam 1

fewer substitutes and a less elastic demand.

A good that is defined broadly has _____ more substitutes and a more elastic demand. fewer substitutes and a more elastic demand. more substitutes and a less elastic demand. fewer substitutes and a less elastic demand. more complements and a more elastic demand.

The supply of drawing paper will increase.

Paper producers can manufacture both printing and drawing paper. What effect would rising prices for printing paper have on the market for drawing paper? The quantity supplied of drawing paper will increase. The supply of drawing paper will decrease. The supply of drawing paper will increase. The supply of drawing paper will double as compared to before.

quantity demanded due to the change in price of another good/service.

Price elasticity of demand measures the change in quantity demanded due to the change in price. demand due to the change in price. quantity demanded due to the change in price of another good/service. price due to a change in quantity demanded. price due to the change in demand

sushi; canned tuna

When Clayton starts working at his first full-time job out of college with a $60,000 salary, he is likely to buy more ________ and less ________. sushi; canned tuna ramen noodles; steak BMWs; Kias computer hardware; computer software hamburger; salmon

nonfinancial

Estimating willingness to pay quantifies _____ costs or benefits associated with a choice. financial nonfinancial opportunity marginal

two products are substitutes or complements.

The cross-price elasticity of demand is used to determine whether _____ a product is an inferior or a normal good. a product is a necessity or a luxury. two products are substitutes or complements. price and total revenue are directly or inversely related. the product's demand curve is linear.

price and quantity supplied are positively related

The law of supply implies that _____ price and quantity demanded are positively related. price and quantity demanded are inversely related. price and quantity supplied are inversely related. price and quantity supplied are positively related. price and quantity demanded are not related.

expectations of future prices

Which of the following is both a shift in supply and a shift in demand? the number of firms in an industry tastes and preferences income changes expectations of future prices the number of buyers

a change in price

Which of the following will cause a movement along the demand curve? the money income of consumers consumer expectations consumer tastes the number or composition of consumers in the market a change in price

buyers and sellers

Who benefits from voluntary trade? buyers sellers the government buyers and sellers buyers and the government

the quantity supplied is less than the quantity demanded.

A shortage occurs whenever: the quantity supplied is greater than the quantity demanded. the price is above the equilibrium quantity. the quantity supplied is less than the quantity demanded. the government places a binding price floor. the government places a nonbinding price ceiling.

(i) and (iii)

A supply curve (i) plots the quantities a seller is willing to sell at different prices. (ii) shows the total cost to the seller. (iii) shows rising marginal costs. (iv) shows rising fixed costs only (i) (i) and (iii) (i), (ii), (iii), and (iv) (i), (ii), and (iii)

cost-benefit

Asking "Benefit beat cost?" allows the _____ principle to be boiled down to a simple question cost-benefit opportunity cost marginal interdependence

interdependence

Asking "What else?" allows the _____ principle to be boiled down to a simple question. cost-benefit opportunity cost marginal interdependence

a rise in the quantity demanded of chocolate chip cookies.

At Trader Joe's, the price of chocolate chip cookies falls. As a result, you would expect to see an increase in the demand for chocolate chip cookies. a rise in the quantity demanded of chocolate chip cookies. a decrease in the demand for chocolate chip cookies. a drop in the quantity demanded of chocolate chip cookies.

normal goods and inferior goods.

Cross-price elasticity measures the relationship between: normal goods and inferior goods. complements and inferior goods. necessities and luxuries. two goods and services. income and substitute goods.

for goods with many substitutes than for goods with only a few

Demand is more elastic _____ in the short run than in the long run for necessities than for luxuries for goods with no substitutes. for goods with many substitutes than for goods with only a few for broadly defined goods than for narrowly defined ones

will not; only Apple

Juan McDonald is willing to pay $600 for a new iPad. Apple (the producer of iPads) is selling a new iPad for $700. It costs Apple $400 to produce this iPad. A voluntary economic transaction between Juan and Apple _____ occur because ____ would be better off due to the transaction. will; neither Juan nor Apple will; both Juan and Apple will not; only Juan will not; only Apple

choices and decision-making of individuals and firms.

Microeconomics is the branch of economics that focuses on the: entire economy. production side of the economy. consumption side of the economy. involvement of the government in the entire economy. choices and decision-making of individuals and firms.

quantity demanded due to the change in price.

Price elasticity of demand measures the change in: quantity demanded due to the change in price. demand due to the change in price. quantity demanded due to the change in price of another good/service. price due to a change in quantity demanded. price due to the change in demand.

The demand for pancakes and the demand for waffles are price elastic.

The cross-price elasticity of demand between pancakes and waffles is positive. This indicates all of the following except one. Which of the following is the exception? Pancakes and waffles are substitutes. An increase in the price of pancakes will shift the demand curve for waffles to the right. An increase in the price of waffles will shift the demand curve for pancakes to the right. A decrease in the supply of waffles will shift the demand curve for pancakes to the right. The demand for pancakes and the demand for waffles are price elastic.

the cost-benefit principle, the opportunity cost principle, the marginal principle, the interdependence principle

The order in which you should apply the four core principles of economics is: the cost-benefit principle, the opportunity cost principle, the marginal principle, the interdependence principle. the interdependence principle, the opportunity cost principle, the cost-benefit principle, the interdependence principle. the opportunity cost principle, the marginal principle, the cost-benefit principle, the interdependence principle. the marginal principle, the cost-benefit principle, the opportunity cost principle, the interdependence principle.

total revenue

The price elasticity of demand helps determine the effect of price changes on a firm's _____ property tax. profit. total output. total revenue. total cost.

relatively flat.

The supply curve for dorm rooms on a university campus is likely to be _____ downward sloping. relatively flat. vertical. horizontal. upward sloping.

relatively elastic.

A local sandwich shop can quickly place an order for food with its local vendors if it uses up its existing resources quickly. This indicates that the price elasticity of supply is: unitary elastic. perfectly elastic. perfectly inelastic. relatively elastic. relatively inelastic

Individuals and societies must choose which wants and needs to satisfy.

Because of scarcity: Individuals and societies are allowed no choice about which wants and needs to satisfy. Individuals and societies must choose which wants and needs to satisfy. All choices about wants and using resources must be made by the government. Choices can be made about which wants to satisfy, but not about which resources to use. Choices must be made about which resources to use, but not about which wants to satisfy.

society has limited resources.

Dependencies between various people's choices reflect the fact that you have limited resources. society has limited resources. resources are spread across different markets. resources can be used across time.

you have limited resources.

Dependencies between your own choices reflect the fact that: you have limited resources. society has limited resources. resources are spread across varying markets. resources can be spread across time.

marginal benefits are equal to marginal costs.

Economists believe that optimal decisions are made up to the point where: marginal benefit is zero. marginal cost is zero. marginal benefits are greater than marginal costs. marginal costs are greater than marginal benefits. marginal benefits are equal to marginal costs.

point at which there is no tendency for change.

Equilibrium is the point at which there is no tendency for change. halfway point in a price range. halfway point on a demand curve. level of prices as set in a centralized economy.

marginal benefits equal marginal costs.

Following the rational rule, the economic surplus is maximized when total benefits equal total costs. total benefits exceed total costs. marginal benefits equal marginal costs. marginal benefits exceed marginal costs.

Luxuries

Goods with an income elasticity of demand greater than 1 are called _____ necessities. inferior goods. substitutes. luxuries. complements.

The supply curve for Latino foods will shift right.

How would a growing Latino population affect the demand for Latino foods? The quantity demanded for Latino foods will decrease. The demand curve for Latino foods will shift left. The supply curve for Latino foods will shift right. The supply curve for Latino foods shift left. The quantity demanded for Latino foods will increase.

increases the demand for Good A.

If Good A and Good B are complements, then a decrease in the price of Good B _____ increases the quantity demanded of Good A. decreases the demand for Good A. increases the demand for Good A. decreases the quantity demanded of Good A. increases the demand for Good B.

Firms entered the market.

Refer to the accompanying figure. What event would cause the supply curve to shift out? Consumers earn higher incomes Consumers earn lower incomes. The price of an input increased. Firms entered the market. Firms expected the price to rise in the future.

rising marginal costs for a seller.

Rising input costs lead to decreased profitability for a seller. increased supply of the item in the market. rising marginal costs for a seller. lower opportunity costs of producing the item

perfectly inelastic because supply is limited.

The supply of paintings by Van Gogh is most likely to be _____ relatively elastic because supply is limited. relatively inelastic because supply is limited. perfectly elastic because the paintings are luxury goods. perfectly inelastic because supply is limited. unit elastic

increase

If people have more time to adjust to a price change, the price elasticity of demand for that good is likely to _____ increase. decrease. fall to zero. be equal to ?2-1. remain unchanged.