ECON 2030: Final Exam
Consider the data above (in billions of dollars) for an economy: Gross Domestic product (in billions of dollars) for this economy equals
$1,200
The following table pertains to Quicheland, an economy in which the typical consumer's basket consists of 10 bushels of prunes and 8 bushels of macadamia. Refer to Table 24.1. The cost of the basket in Year 2 was
$166
Based on the table above, what is the national income for this economy
$2,950 billion
Mia Denton was an accountant in 1943 and earned $21,000 that year. Her son is an accountant too and he earned $270,000 this year. Suppose the price index was 18.3 in 1943 and 20.2 in the current year. Mia's 1943 income in current year dollars is
$23,180
What is the equilibrium price and the equilibrium quantity?
$26 and $35
Suppose that you have a choice between going to the movies with a friend for two hours or working at you job. If you go to the movies, you will spend $7 on a ticket and $5 on popcorn. If you choose to work, you will earn $10 an hour. What is your opportunity cost of going to the movies?
$32 (everything you give up to see the movie -- the money for the ticket, the money for the popcorn, and the foregone income)
At a recent company meeting, Geraldine Erwin, sales manager of Dastoria, a flavored-beverage producer announced, "We have increased our sales by 8 percent in just six months." Suppose six months ago, its sales amounted to $452,000, what is the value of its sales today?
$488,160
Consider the following data for Tyrovia, a country that produces only two products: guns and butter. Real GDP for Tyrovia for 2018 using 2009 as the base year equals
$690
Suppose that a very simple economy only produces four goods and services: sweatshirts, dental examinations, coffee drinks, and coffee beans. Assume that all the coffee beans in this economy are used in the production of coffee drinks. What is GDP using the information in the attached table?
$8,750
if the nominal interest rate is 5 percent and the real interest rate is 7 percent, then the inflation rate is
-2 percent
The following table pertains to Quicheland, an economy in which the typical consumer's basket consists of 10 bushels of prunes and 8 bushels of macadamia. Refer to Table 24-1. If Year 1 is the base year, then the inflation rate in Year 2 was
-2.35 percent
If the law of demand applies to this good, then Q1 could be
0
Refer to Figure 2-6. If the economy is currently producing at point D, what is the opportunity cost of moving to point B?
0 forks
Suppose a basket of goods and services has been selected to calculate the CPI and Year 1 has been selected as the base year. In Year 1, the basket's cost was $50; in Year 2, the basket's cost was $52; and in Year 3, the basket's cost was $55 The value of the CPI in Year 3 was
110.0
Refer to Figure 2-6. If the economy is currently producing at point A, what is the opportunity cost of moving to point B?
12 thousand forks
If nominal GDP is $5 trillion and real GDP is $4 trillion, the GDP deflator is
125
Refer to Table: Roses. The table above shoes the demand schedules for roses of two individuals (Madison and Hannah Ann) and the rest of the market. If the price of a dozen roses is $4, what is the Market Quantity Demanded
150 dozen
Refer to Figure 2-6. If the economy is currently producing at point B, what is the opportunity cost of moving to point A?
16 thousand spoons
If the GDP deflator rises from 185 to 190, what is the rate of inflation between the two years
2.7%
Use the supply schedule below to answer the following question: if the law of supply applied to this good, then Q1 could be
200
Candace can perform either a combination of 35 manicures and 70 pedicures or a combination of 50 manicure and 45 pedicures. If she now performs 35 manicures and 70 pedicures, what is the opportunity cost of performing an additional 15 manicures?
25 pedicures
If the price of pineapple juice was $4.50 a gallon and it is now $5.75 a gallon, what is the percentage change in price?
27.7%
Last year real GDP per person in the imaginary nation of Olympus was 4,250. The year before it was 4,100. By about what percentage did Olympian real GDP per person grow during the period?
4 percent
Use the above graph to answer the following question. If this economy uses all of it's resources to produce steaks, what's the maximum amount of steaks it can possibly produce?
40 steaks
the price index was 105 in Year 1 and 111 in Year2. What was the inflation rate?
5.7 percent
what is the opportunity cost to Batterland of increasing the production of pancakes from 150 to 300?
75 waffles
The following table pertains to Quicheland, an economy in which the typical consumer's basket consists of 10 bushels of prunes and 8 bushels of macadamia. Refer to Table 24-1. If Year 1 is the base year, then the CPI for Year 2 was
97.65
Refer to Figure: Clorox Wipes. An increase in the price of Clorox wipes be represented by a movement from
B to A
which of these activities will most likely impose a negative externality?
Bridget drives her car after having too much alcohol to drink
Refer to Figure 2-1. _________________ is (are) unattainable with current resources
C
Country Y has a population of 1,500 of whom 375 work 7 hours a day to make 128,000 final goods. Country Z has a population of 2,200 of whom 880 work 5 hours a day to make 384,000 final goods. Which of the following is true?
Country Y has lower productivity and lower real GDP per person than Country Z
Refer to Figure: Clorox Wipes. An increase in the price of substitute (Lysol wipes) would be represented by a movement from
D1 to D2
Refer to Figure: Clorox Wipes. Assuming Clorox Wipes are a normal good, a decrease in income would be represented by a movement from
D2 to D1
Bill is restoring a car and has already spent $4000 on the restoration. He expects to be able to sell the car for $5800. Bill discovers that he needs to do an additional $2400 of work to make the car worth $5800 to potential buyers. He could also sell the car now, without completing the additional work, for $3800. What should he do?
He should sell the car now for $3800
Studies have shown that drinking one glass of red wine per day may help precent heart disease. Assume this is true, and a fungal disease destroys a large portion of the grape harvest of California vineyards. In the market for red wine, these two developments would
Increase demand and decrease supply, resulting in an increase in the equilibrium price and an ambiguous effect on the equilibrium quantity of red wine
Joe and Bob purchase oranges at a grocery store, but Bob also grows oranges in his backyard. Regarding these two practices, which of the following statements is correct?
Only Joe's and Bob's grocery store purchases are included in GDP
The following equations represent the demand and supply for bird feeders. QD= 35 - P QS= -5 + 3P what is the equilibrium price (P) and quantity (Q - in thousands) of bird feeders?
P= $10; Q= 25 thousand
if the quantity of tacos demanded is represented by the equations QD= 20-0.5P then the corresponding price of tacos is represented by the equation
P= 40 - 2QD
Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for limo rides and that limo rides and champagne are complements. What panel describes what happens in this market when the price of champagne falls?
Panel (c)
Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for limo rides and that limo rides and helicopter rides are substitutes. What panel describes what happens in this market when the price of helicopter rides fall?
Panel (d)
Refer to Figure 3-7. Assume that the graphs int his figure represent the demand and supply curves for ramen noodles, an inferior good. Which panel describes what happens in this market as a result of an increase in income?
Panel (d)
Suppose the state of Illinois passes a law that bans smoking in restaurants. As a result, residents of Wisconsin who do not like breathing second-hand smoke begin driving across the border to Illinois to eat at restaurants there. Which of the following principles does this best illustrate?
People respond to incentives
Refer to Figure 2-1. _____________ is (are) inefficient in that not all resources are being used
Point A
Refer to Figure 2-1. ________________________ is (are) unattainable with current resources
Point C
If the price of garlic is represented by equation P= 25 - QD, then the corresponding quantity of garlic demanded is represented by the equation
QD= 25 - P
Refer to Figure: Clorox Wipes. A decrease in the price of bleach (an input for Clorox wipes) would be represented by a movement from
S1 to S2
Refer to Figure: Clorox Wipes. Acquiring new machinery that could produce Clorox wipes more quickly (i.e. an advance in technology) would be represented by a movement from
S1 to S2
Each day Sasha works 6 hours and produces 7 units of goods and services. Clara works 10 hours each day and produces 9 units of goods and services. It follows that
Sasha's productivity is higher than Clara's
Which of the following would likely be studied by a microeconomist rather than a macroeconomist?
The impact of minimum-wage laws on employment in the fast food industry
Social Security payments are indexed for inflation using the CPI. A recent newspaper editorial claimed that Social Security recipients are harmed by years of low inflation because they do not receive as large an increase in their payments as they do in years of high inflation. Which of the following statements is correct?
The newspaper editorial could be correct if the prices of the goods consumed by Social Security recipients change at a different rate than the prices of the goods in the market basket used to compute the CPI
Refer to Table 4-4. Suppose that the quantity of labor demanded decreases by 80,000 at each wage level. What are the new free market equilibrium hourly wage and the new equilibrium quantity of labor?
W= $8.50; Q= 550,00
Refer to Figure 2-4. A movement from ______________ is the result of advancements in both plastics and food products production technology
X to Y
If the consumer price index was 93 in Year 1, 97 in Year 2, and 100 in Year 3, then the base year must be
Year 3
the circular flow diagram
all of the above are correct
Refer to Table 2-1. Assume Love's kitchen only produces cakes and roast chicken. A combination of 40 cakes and 50 roast chickens would appear
along Love's production possibilities frontier
which of these activities will most likely result in a positive externality?
an elderly woman plants a flower garden on the vacant lot next to her house
the willingness of citizens to pay for vaccinations does not include the benefit society receives from having vaccinated citizens who cannot transmit an illness to others. This extra benefit society gets from vaccinating its citizens is known as
an externality
an outward shift of a nation's production possibilities frontier can occur due to
an increase in the labor force
Electric car enthusiasts want to buy more electric cars at a lower price. All of the following events would have this effect except
an increase in the price of gasoline (a substitute for electric cars)
If a decrease in income leads to an increase in demand for frozen taquitos, then frozen taquitos are
an inferior good
Most goods and services produced at home
and most goods and services produced illegally are excluded from GDP
Suppose your management professor has been offered a corporate job with a 30 percent pay increase. He has decided to take the job. For him, the marginal
benefit of leaving was greater than the marginal cost
an increase in the price of bread produced domestically will be reflected in
both the GDP deflator and the consumer price index
in economics, capital refers to
buildings and machines used in the production process
Investment, as defined by economists, would not include which of the following? Ford
buys U.S. government bonds
the production possibilities frontier is a graph that shows the various combinations of output that an economy
can produce
Tommy likes to consume lemonade with his sweet tea (as an "Arnold Palmer"). For Tommy, lemonade and sweet tea are
complements, and his cross-price elasticity of demand between the two goods is negative
Refer to Table 2-1. Love faces __________________ opportunity costs in the production of cakes and roast chicken.
constant
The opportunity cost of taking an online history class is
equal to the highest value of an alternative use of the time and money spent on the class
because every transaction has a buyer and a seller,
every transaction contributes equally to an economy's income and to its expenditure
one of the widely acknowledged problems with using the consumer price index as a measure of the cost of living is that the CPI
fails to account for the introduction of new goods
The output of Mexican citizens who work in Texas would be included in the
gross national product of Mexico
Refer to Table 3-2. The table above shows the demand schedules for caviar of two individuals (Ari and Sonia) and the rest of the market. if the price of caviar falls from $45 to $35, the market quantity and demanded would
increase by 70 oz.
Over the last few decades, Americans have chosen to cook less at home and eat more at restaurants. This change in behavior, by itself, has
increased measured GDP by the value added by the restaurant's preparation and serving of the meals
Legalizing all forms of illegal activities
increases GDP and reduces the size of the underground economy
another term for factors of production is
inputs
Refer to Table 2-1. Assume Love's kitchen only produces cakes and roast chicken. A combination of 20 cakes and 60 roast chickens would appear
inside Love's production possibilities frontier
the value of goods added to a firm's inventory in a certain year is treated as
investment, since GDP aims to measure the value of the economy's production that year
the decisions of firms and households are guided by prices and self-interest in a
market economy
Mitchell 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 $100, so he can only buy one. This illustrates the basic concept that
people face trade-offs
The adage, "There is no such thing as a free lunch," is used to illustrate the principle that
people face tradeoffs
Suppose the state of Massachusetts passes a law that increases the tax on alcoholic beverages. As a result, residents in Massachusetts start purchasing their alcohol in surrounding states. Which of the following principles does this best illustrate?
people respond to incentives
the overriding reason why households and societies fave many decisions is that
resources are scarce
Economics deals primarily with the concept of
scarcity
Which of the following statements is correct?
the CPI can be used to compare dollar figures from different points in time
what basket of goods and services is used to construct the CPI?
the goods and services that are typically bought by consumers as determined by government surveys
a rational decision maker takes an action if an only if
the marginal benefit of the action exceeds the marginal cost of the action
When computing the opportunity cost of attending a concert you should include
the price you pay for the ticket and the value of your time
which of the following items is the one type of household expenditure that is categorized as investment rather than consumption?
the purchase of a new home
Will's expenditures on food for three consecutive years, along with other values, are presented in the following table. Refer to Table 24-4. If the nominal interest rate was 8 percent in Year 2, then
the real interest rate in Year 2 was 4 percent
which of the following statements is correct about the relationship between the nominal interest rate and the real interest rate?
the real interest rate is the nominal interest rate minus the rate of inflation
Hurricane Katrina damaged a large portion of oil refining and pipeline capacity in the Gulf coast states. In the market for gasoline
the supply curve shifted to the left resulting in an increase in the equilibrium price
Depreciation is
the value of worn-out equipment, machinery, and buildings.
For most students, the largest single cost of a college education is
the wages given up to attend school
Refer to Figure: Hunter Hayes Concert Tickets. At a price of $5
there is a shortage of 4 tickets
Refer to Figure: Chase Rice Concert Tickets. If the price is $25
there is a surplus of 300 tickets
the consumer price index is used to
turn dollar figures into meaningful measures of purchasing power
High school athletes who skip college to become professional athletes
understand that the opportunity cost of attending college is very high
Which of the following transactions represents the purchase of a final good?
your father buys a new John Deere riding lawn mower
