ECON Exam: Chapters 7&8
If the price of oil increases from $80 to $90 per barrel, the quantity supplied increases from 100 to 105 million barrels per day. What is the price elasticity of supply using the midpoint method? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a 0.41 b 0.22 c 0.15 d 0.05
a 0.41
Figure: Gun Market Reference: Ref 5-4 (Figure: Gun Market) In the gun market shown, the number of guns in the city that is having the gun buyback program is: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a 1,670. b 3,730. c 6,000. d 2,060.
a 1,670.
A retail outlet sells bottled water. Which scenario would cause them to use a Òbuy low and sell highÓ strategy with bottled water? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a A hurricane is expected to arrive within one week. b A new producer for bottled water is expected to enter the market within the next three months. c Consumers are moving away from bottled water consumption to filtered tap water consumption. d Imports of bottled water begin to arrive in town.
a A hurricane is expected to arrive within one week.
Newly formed trade unions raise wages for workers in Country X, where cars are manufactured. The higher wages increase the costs for the car manufacturers, who then relocate to Country Y, where labor costs are lower. Car manufacturing begins to thrive in Country Y relative to Country X. Which answer BEST describes the concept highlighted by this scenario? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a Changes in one market can affect markets and people in other regions of the world. b Trade unions always cause industries to collapse. c The links between markets are weakening over time. d Manufacturing industries are the only industries where markets are linked well.
a Changes in one market can affect markets and people in other regions of the world.
Because of aging requirements it takes many years to make good Scotch. If a technology were invented that made it possible to create good Scotch literally overnight, how would the short-run supply of good Scotch change? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a It would become more elastic. b It would become less elastic. c Its elasticity would remain the same. d It is impossible to say anything about the change.
a It would become more elastic.
Rising oil prices during the 1970s shifted flower production from California to Kenya. Which of the following answers explains this shift? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a Markets are linked to one another. b Rising oil prices decreased greenhouse heating costs in California, making it cheaper to grow flowers in warmer climates. c The Kenyan flower industry is run by the California flower growers. d No transportation costs exist for flowers.
a Markets are linked to one another.
Brazil is the world's largest sugar cane producer and sugar cane can be used for producing sugar and the fuel ethanol for automobiles. Which sequence of events is correct? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a Rising oil prices cause Brazilian producers to shift sugar cane production from sugar to the fuel ethanol. The decrease in sugar supply raises the price of candy bars. b Rising oil prices cause Brazilian producers to shift sugar cane production from the fuel ethanol to sugar. The increase in sugar supply decreases the price of candy bars. c Falling oil prices cause Brazilian producers to shift sugar cane production from sugar to the fuel ethanol. The increase in sugar supply raises the price of candy bars. d Falling oil prices cause Brazilian producers to shift sugar cane production from the fuel ethanol to sugar. The increase in sugar supply raises the price of candy bars.
a Rising oil prices cause Brazilian producers to shift sugar cane production from sugar to the fuel ethanol. The decrease in sugar supply raises the price of candy bars.
Why do supply curves tend to be more elastic over time? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a Sellers have time to adjust and increase production. b Consumers have time to look for substitutes for the good. c Consumers have time to reduce their consumption of the good. d All of the answers are correct.
a Sellers have time to adjust and increase production.
If an increase in oil prices made it profitable to use corn-based ethanol for fuel and corncobs are a waste product of ethanol production, what will happen in the market for corncob pipes? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a Supply will increase, prices will fall, and sales will increase. b Supply will decrease, prices will rise, and sales will decrease. c Demand will increase, prices will rise, and sales will increase. d Demand will decrease, prices will fall, and sales will decrease.
a Supply will increase, prices will fall, and sales will increase.
Government gun buyback programs designed to take guns off the street cause the demand for low-quality guns to increase. Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a True b False
a True
Since value is subjective, a good can be normal for one person and inferior for another. Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a True b False
a True
One of the biggest problems with centrally planned economies is that: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a central planners have limited information on the true value of the various ways to utilize scarce resources. b they fail to reach economic efficiency because their policies limit global trade. c workers have little incentive to work for the central planner. d they typically have higher levels of corruption compared with market economies.
a central planners have limited information on the true value of the various ways to utilize scarce resources.
If people buy less chewing gum at every price when their incomes fall, then Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a chewing gum is a normal good. b the demand for chewing gum is positively sloped. c demand for chewing gum has increased. d the price of chewing gum has increased.
a chewing gum is a normal good.
The market solves the information problem when allocating resources by: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a collapsing all the relevant information about uses of the good into its price. b collapsing all the relevant information about inputs of the good into the level of output. c aggregating all the relevant information about the output of the good into the supply curve. d aggregating all the relevant information about the output of the good into the demand curve.
a collapsing all the relevant information about uses of the good into its price.
The market is effectively able to allocate goods to their highest-valued uses because: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a consumers will only purchase the good if its value is greater than its price. b government intervention keeps prices consistent with their market value. c suppliers will only produce goods for which the cost of production is less than the price. d consumers have a great incentive to conserve goods for future use.
a consumers will only purchase the good if its value is greater than its price.
Workers in Peru collect cochineal bugs used to dye certain United States food items red. Market activities such as this one can best be described as: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a cooperative, voluntary, and undirected. b chaotic and primitive. c directed and uncooperative. d orderly, involuntary, and centrally directed.
a cooperative, voluntary, and undirected.
Speculation often: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a helps smooth price fluctuations. b generates large profits for only a small group of individuals. c is illegal. d decreases economic efficiency.
a helps smooth price fluctuations.
Suppose speculators expect that the supply of oil will decrease next year and as a result, buy up oil today and put it into storage. This should cause the value of that oil to: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a increase. b decrease. c either increase or decrease. d remain unchanged.
a increase.
If the price of cocoa rises by 10 percent and the elasticity of supply is 0.5, then the quantity supplied: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a increases by 5 percent. b increases by 20 percent. c decreases by 5 percent. d decreases by 20 percent.
a increases by 5 percent.
Figure: Slave Redemption Reference: Ref 5-2 (Figure: Slave Redemption) Refer to the figure. Assume the graph illustrates the Sudanese slave trade. When slave redeemers enter the market, the price of slaves: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a increases to $40. b decreases to $17. c stays unchanged at $40. d exceeds $40.
a increases to $40.
What links the flower growers in Kenya with romantic American teenagers who give flowers as gifts of affection? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a markets b hierarchical authority c central planners d the United States Senate
a markets
The market acts like a computer because: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a prices are information processors. b people Òconnect withÓ each other when they buy and sell. c much of the Internet is used for buying and selling. d computers were developed to create new markets.
a prices are information processors.
If the demand for a product increases as the result of a decline in income, it can be concluded that the Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a product is an inferior good. b demand for the product is inelastic. c price elasticity of demand for the product equals unity. d demand for the product is elastic.
a product is an inferior good.
If the price elasticity of supply is 4, an increase in the price of Good X by 5 percent causes the quantity supplied of it to: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a rise 20 percent. b fall 20 percent. c rise 1.25 percent. d fall 1.25 percent.
a rise 20 percent.
Millions of producers working across the world cooperate to ensure that many more millions of consumers can have the goods and services they desire. These producers do not know each other and are not coordinated by a central agency. Their actions are directed simply by: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a self-interest. b robotic technology. c their governments. d computer technology.
a self-interest.
Gun buyback programs will be less effective if the: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a supply of guns is more elastic. b supply of guns is more inelastic. c demand for guns is more elastic. d demand for guns is more inelastic.
a supply of guns is more elastic.
Gun buyback programs, such as the one instituted in Washington, D.C., tend to not be very effective because: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a the supply of the types of guns exchanged is highly elastic. b the supply of the types of guns exchanged is not very elastic. c the programs tend to have a large impact on the price of guns on the street. d the programs simply end up decreasing the elasticity of supply.
a the supply of the types of guns exchanged is highly elastic.
The equilibrium price in the market represents the: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a value of the good in its next highest-valued use. b value of the good in all its uses. c price of the good in its lowest-valued use. d average cost of producing the good.
a value of the good in its next highest-valued use.
Figure: Slave Redemption and Elasticity Reference: Ref 5-3 (Figure: Slave Redemption and Elasticity) Refer to the figure. Assume the graph illustrates the Sudanese slave trade. How many slaves are freed after the redemption program? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a 1,000 b 400 c 600 d 1,400
b 400
Figure: Slave Redemption Reference: Ref 5-2 (Figure: Slave Redemption) Refer to the figure. Assume the graph illustrates the Sudanese slave trade. When slave redeemers enter the market, the number of slaves remaining in captivity is: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a 100. b 400. c 500. d 1,100
b 400.
In The Beautiful Tree, Dr. James Tooley describes how he found, in developing country after developing country, countless private schools aimed at educating the poor's children. The schools are completely self-funded, relying on tuition to pay salaries and upkeep. Although the teachers are effective, the schools are very basic: large playgrounds and modern building construction are very rare. Based on this information, what is the elasticity of the supply of schools? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a Elastic, because these schools only exist in the short run. b Elastic, because these schools are relatively easy to establish. c Inelastic, because these schools are located all over the world. d Inelastic, because these schools must negotiate with teacher unions.
b Elastic, because these schools are relatively easy to establish.
Consistent with economic logic, gun buyback programs have been very effective in reducing the number of guns in a city. Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a True b False
b False
How can selling a futures contract mitigate agricultural risk for farmers? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a Farmers can grow crops that are not subject to weather inclemency. b Farmers can pin down a price for their produce even if there is volatility in market prices. c Futures contracts allow farmers to store their grains in silos until the market prices rise. d Futures contracts allow farmers to trade in crops whose prices will fall in the future.
b Farmers can pin down a price for their produce even if there is volatility in market prices.
In an effort to decrease carbon emissions in California, the state government decided to implement aÊcar buyback program in order to decrease the number of cars on the streets. The California government would offer a $2,000 tax rebate for each car turned in. The cars would then be demolished and the steel recycled.ÊUnder what conditions would a program like this succeed at significantly decreasing the number of cars driven in California?Ê Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a If the supply elasticity of new automobiles globally was inelastic.Ê b If the supply elasticity of automobiles in California was inelastic.Ê c If the supply elasticity of automobiles in California was elastic.Ê d If the supply elasticity of new automobiles inÊCalifornia was inelastic.Ê
b If the supply elasticity of automobiles in California was inelastic.Ê
Higher oil prices represent higher energy costs in general across the economy leading to increased use of bicycles and public transportation. Which answer BEST describes the idea that changes in one market can produce effects in previously unseen markets? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a The rise in the demand for bicycles causes a rise in the price of bicycles. b Increased bicycle demand increases the demand for rubber to make bicycle tires. Farmers in Southeast Asia switch from rice to rubber production and the price of rice increases. c The greater demand for public transportation offsets the demand for heating oil. d The rise in the demand for oil causes a rise in the demand for bicycles.
b Increased bicycle demand increases the demand for rubber to make bicycle tires. Farmers in Southeast Asia switch from rice to rubber production and the price of rice increases.
Wearing costumes at Halloween is largely a Western custom. In China, the Halloween festivals are very different in that they involve more of the presentation of gifts and food to family members and others that have passed away. Which statement is a reasonable explanation for why the Western market for Halloween costumes might be important for Chinese firms and factories? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a The costumes that the Chinese do not use during their festivals can be exported to the West. b Knowledge of the Western Halloween festival and demand for costumes can translate into profits for Chinese producers who can produce such costumes at lower costs. c The West can export costumes for the Chinese to wear during their Halloween Festivals. d Chinese producers can try to market Chinese festivals to American consumers.
b Knowledge of the Western Halloween festival and demand for costumes can translate into profits for Chinese producers who can produce such costumes at lower costs.
Which one of these goods is most likely to be an inferior good for most people with incomes over 100,000? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a Beer b Natural Light Beer c Gasoline. d Sheetz Gasoline.
b Natural Light Beer
Figure: Demand Curve Reference: Ref 7-1 (Figure: Demand Curve) Refer to the figure. Which point on the graph represents the value of the good in its next highest valued use? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a Point A b Point B c Point C d the origin
b Point B
Figure: Supply Elasticity Refer to the figure. Which one of the four supply curves has the greatest responsiveness to price changes? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a Supply Curve A b Supply Curve B c Supply Curve C d Supply Curve D
b Supply Curve B
The text states: The great economic problem is to arrange our limited resources to satisfy as many of our wants as possible. How does a market achieve this goal? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a It chooses central planners who are experts at identifying the best uses of resources. b The forces of demand and supply use prices as a signaling device that directs resources to their highest-value uses. c It ensures that prices provide an even signal by making sure prices across all markets are equal. d It offers resource-based futures contracts.
b The forces of demand and supply use prices as a signaling device that directs resources to their highest-value uses.
Dairy farmers use sawdust for milk cow bedding. What happened to the price of milk because of the housing slowdown in 2007? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a The price of milk rose as the demand for milk rose. b The price of milk rose as the supply of milk decreased. c The price of milk fell as the demand for milk decreased. d The price of milk fell as the supply of milk increased.
b The price of milk rose as the supply of milk decreased.
Land used to grow corn can also grow soybeans. As the demand for corn used in ethanol began to increase the price of corn, what happened to the price of soybeans? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a The price of soybeans fell due to lower demand for soybeans. b The price of soybeans rose since farmers began planting corn instead of soybeans, thus decreasing the supply of soybeans. c The price of soybeans rose since they were in limited supply and demand increased. d The price of soybeans stayed the same, since subsidies made up for any differences in the price between corn and soybeans.
b The price of soybeans rose since farmers began planting corn instead of soybeans, thus decreasing the supply of soybeans.
U.S. Highway 12 is part of a crucial two-lane artery from the seaports in Washington State to the tar sands in Canada. Extracting oil from the tar sands requires very large equipment and transporting it takes up both lanes of U.S. Highway12. In August of 2010, Idaho granted ConocoPhilips a road permit that allowed it to transport four oil-processing units. Without this permit, ConocoPhilips would have had to transport those units a much longer distance to get them to their destination. If permits for this highway were not allowed, how would that affect the elasticity of which curve in the market for oil? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a The supply curve would become more elastic. b The supply curve would become less elastic. c The demand curve would become more elastic. d The demand curve would become less elastic.
b The supply curve would become less elastic.
Why is the supply curve for oil rather inelastic? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a There are not many widely available good substitutes for oil. b To increase the production of oil would require a very significant outlay in terms of costs of exploration and drilling. c The world supply of oil is decreasing. d The supply curve for oil is always perfectly inelastic.
b To increase the production of oil would require a very significant outlay in terms of costs of exploration and drilling.
Which of the following statements about the price elasticity of supply in the Sudanese slave trade is correct? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a When the supply curve is more elastic, every slave bought by the redeemers is one fewer slave held in captivity. b When the supply curve is perfectly inelastic, every slave bought by the redeemers is one fewer slave held in captivity. c When the supply curve is less elastic, every slave bought by the redeemers is one additional enslaved person. d When the supply curve is more inelastic, every slave bought by the redeemers is one additional enslaved person.
b When the supply curve is perfectly inelastic, every slave bought by the redeemers is one fewer slave held in captivity.
In 1808, when slavery in the United States was still legal, Congress banned the importation of new slaves. Under these circumstances, would a slave redemption campaign have worked well? Why? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a Yes, because the supply of slaves was elastic. b Yes, because the supply of slaves was inelastic. c No, because the supply of slaves was elastic. d No, because the supply of slaves was inelastic.
b Yes, because the supply of slaves was inelastic.
A good is classified as inferior if Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a consumers buy less when the price rises. b consumers buy less when income rises. c consumers buy less when the price falls. d consumers buy more when income rises.
b consumers buy less when income rises.
The market solves the incentive problem when allocating resources because the: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a consumers will pay for the good only if its price is greater than the value of use. b consumers will pay for the good only if its value of use is greater than the price. c suppliers will produce the good only if its cost is less than the value of use. d suppliers will produce the good only if its value of use is less than the cost.
b consumers will pay for the good only if its value of use is greater than the price.
Economic theory suggests that gun buyback programs: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a are effective in reducing the number of guns on city streets. b do not reduce the number of guns on city streets. c are most effective if the supply curve of guns is perfectly elastic. d reduce the demand for new and better-functioning guns.
b do not reduce the number of guns on city streets.
Markets are linked in unpredictable and creative ways by: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a treaties that govern trade. b entrepreneurs who look for methods of cutting costs. c careful planning by bureaucrats. d treaties, entrepreneurs, and bureaucratic planning.
b entrepreneurs who look for methods of cutting costs.
In a free market, the price of a good is equal to the value of the good: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a in its next lowest-valued use. b in its next highest-valued use. c to the highest bidder among those who have satisfied their wants for the good. d given the resources used to produce the good.
b in its next highest-valued use.
If speculators expect that the future price of corn will be higher, they will cause today's price of corn to ____ and the future price of corn to be ____ than it would have been without speculation. Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a decrease; higher b increase; lower c decrease; lower d increase; higher
b increase; lower
For a price increase from $100 to $110, supply is the most elastic when quantity supplied: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a increases from 20 to 30. b increases from 20 to 40. c does not change. d increases from 20 to 22.
b increases from 20 to 40.
When the supply curve in the Sudanese slave trade is perfectly ____, every slave bought by the redeemers results in/is ____ held in captivity. Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a inelastic; more slaves b inelastic; one less slave c inelastic; redeemed at a lower price than expected d elastic; redeemed at a higher price than expected
b inelastic; one less slave
When the price of oil rises, consumers economize by buying ____ and by ____. Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a more oil; finding substitutes b less oil; recycling c less oil; finding substitutes d more oil; recycling
b less oil; recycling
A decrease in the demand for a good sold in Market A: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a will affect only Market A. b might affect other markets, even those halfway across the world. c will not affect Market A, but it will affect nearby markets. d might affect distant markets, but it will not affect Market A.
b might affect other markets, even those halfway across the world.
Speculators: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a serve no important economic function, except buying low and selling high. b move resources from periods of low-value use to periods of high-value use. c move resources from poor countries to rich counties. d are a key source of inflation.
b move resources from periods of low-value use to periods of high-value use.
If Francis experiences a decrease in his income, we would expect that Francis's demand for Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a each good he purchases will remain unchanged. b normal goods will decrease. c most goods will increase. d inferior goods will decrease.
b normal goods will decrease.
When the price of pizza increases, consumers have an incentive to: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a decrease their demand for pizza. b purchase substitute goods, such as Chinese food. c increase their consumption of pizza since it is now more valuable. d open another pizza restaurant in order to increase supply and drive prices down.
b purchase substitute goods, such as Chinese food.
Because producing more oil requires a significant increase in exploration and drilling costs, the supply curve for oil is: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a relatively elastic. b relatively inelastic. c perfectly elastic. d unit elastic.
b relatively inelastic.
Figure: Slave Redemption with Perfectly Elastic Supply Refer to the figure. Assume the graph illustrates the Sudanese slave trade. If the supply curve is perfectly elastic as it is in the graph, a rise in the demand for slaves (from D1 to D2) causes: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a the number of people in slavery to fall to zero after the redemption program. b the price of slaves to remain unchanged. c 900 additional people to enter slavery temporarily before they are released. d the supply of slaves in Sudan to decrease.
b the price of slaves to remain unchanged.
If the price of coffee falls by 10 percent and the quantity supplied of coffee falls by 1.5 percent, then the elasticity of supply of coffee is: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a 10. b 1.5. c 0.15. d 6.67.
c 0.15.
If the price of cocoa rises by 20 percent, the quantity supplied of cocoa rises by 4 percent. What is the elasticity of supply? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a 5 b 2 c 0.2 d 0.008
c 0.2
If the price of aluminum increases 4 percent, and the quantity supplied increases by 1 percent, what is the price elasticity of supply? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a Ð4.0 b 4.0 c 0.25 d 3.0
c 0.25
Figure: Slave Redemption Reference: Ref 5-2 (Figure: Slave Redemption) Refer to the figure. Assume the graph illustrates the Sudanese slave trade. When slave redeemers enter the market, the total number of freed slaves is ____ and the net number of freed slaves is ____. Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a 1,500; 500 b 1,000; 400 c 1,100; 100 d 500; 1,000
c 1,100; 100
If the elasticity of supply is 2.0, what happens to quantity supplied following a 7 percent increase in price? Quantity supplied increases: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a 3.5 percent. b 2.9 percent. c 14 percent. d 9 percent.
c 14 percent.
If the price of Good Y falls from $10 to $8, and the quantity supplied of it falls from 1,000 units to 600 units, the price elasticity of supply is: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a 2.67. b -2.67. c 2.25. d -2.25.
c 2.25.
Figure: Slave Redemption and Elasticity Reference: Ref 5-3 (Figure: Slave Redemption and Elasticity) Refer to the figure. Assume the graph illustrates the Sudanese slave trade. How many new slaves are captured after the redemption program is installed? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a 1,400 b 800 c 400 d 1,000
c 400
The locovore movement encourages eating locally produced food to reduce the greenhouse gases emitted from transporting food long distances, placing upward pressure on local land prices as farmland becomes more valuable. Which statement reflects what will likely occur as a result? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a The price of beef falls as more people eat beef. b Hunting animals becomes more common. c Local forests become less common. d In the short term, the price of lumber rises.
c Local forests become less common.
In the aftermath of the Great Recession (falling incomes) in 2008, McDonalds saw sales revenue increase. What is the best explanation for this result? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a McDonalds tastes good. b People have more time to wait in line because they are unemployed. c McDonalds is an inferior good. d McDonalds were in neighborhoods insulated from the negative effects of the Great Recession.
c McDonalds is an inferior good.
On June 14, 2011, the Delaware Senate approved a gun buyback program. The yearlong program would authorize the state to pay $100 for every gun turned over to police. What sort of guns should Delaware officials expect to get if this plan becomes law? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a Small guns, usually used as self-defense in bad neighborhoods. b Heavy guns, usually used by criminals to support their illegal enterprises. c Nonworking guns, usually kept in someone's back closet. d Guns that use a lot of bullets very quickly.
c Nonworking guns, usually kept in someone's back closet.
South Africa, with large natural diamond deposits, is famous for its diamond exports. The international demand for diamonds for industrial and other purposes, such as jewelry, has led to the production of synthetic diamonds by other countries, such as the United States. Which answer BEST describes the concept highlighted in this scenario? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a International cooperation has been reduced over the years. b Consumers prefer synthetic diamonds to natural ones. c Prices provide incentives for sellers. d Markets are no longer linked together.
c Prices provide incentives for sellers.
Figure: Demand Curve Reference: Ref 7-1 (Figure: Demand Curve) Refer to the figure. Which part of the demand curve represents the satisfied wants? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a Point B b Segment AC c Segment AB d Segment BC
c Segment AB
Although large parts of beef cattle become meat products, other parts become leather jackets. As the demand for beef rises, what happens in the market for leather jackets? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a Supply decreases and price increases. b Demand and price increase. c Supply increases and price decreases. d Demand and price decrease.
c Supply increases and price decreases.
If a good is an inferior good, this implies that Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a only the poor will buy the good. b as incomes fall, less will be spent on the good. c as incomes rise, the demand for the good will fall. d the good does not obey the law of demand.
c as incomes rise, the demand for the good will fall.
Futures markets are common in commodities, financial instruments, and: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a nowhere else. b some barter markets in third-world countries. c currencies. d telecommunications.
c currencies.
It is Valentine's Day in the United States, and you give your lover one dozen roses that were freshly picked 72 hours ago from the fields of Kenya. What made this gift possible? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a the United Nations Director of Horticultural Operations, who oversees the planting and transportation of flowers around the world b the Jennifer Flowers Act, which helps coordinate the logistics of agricultural trade flows between the United States and Kenya c economic markets d tariff laws in the United States
c economic markets
Suppose that a war in the Middle East makes oil increasingly scarce. Oil usage should: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a increase in low-value uses. b fall the most in high-value uses. c fall the most in low-value uses. d fall equally across low- and high-value uses.
c fall the most in low-value uses.
If the price elasticity of supply is 0.75, then when the price of Good Y falls by 10 percent, the quantity supplied of Good Y: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a rises by 7.5 percent. b rises by 133 percent. c falls by 7.5 percent. d falls by 133 percent.
c falls by 7.5 percent.
Jeff agrees to buy 40,000 pounds of frozen pork bellies for delivery one year from now; upon delivery he will pay $32,400. This transaction is called a: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a prediction settlement. b timing indenture. c futures contract. d hog agreement.
c futures contract.
Evidence from the Sudan indicates that the supply of slaves is likely: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a perfectly elastic. b perfectly inelastic. c more elastic than inelastic. d more inelastic than elastic.
c more elastic than inelastic.
A person who tries to profit by guessing changes in future prices is a: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a profiteer. b marketer. c speculator. d price raider.
c speculator.
Ethanol and sugar are both made from sugar cane, and ethanol can be used as a fuel substitute for oil. Increasing oil prices cause the demand for ethanol to increase. This will cause the __ sugar to __ and its price to __. Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a demand for; decrease; decrease b supply of; increase; increase c supply of; decrease; increase d demand for; increase; increase
c supply of; decrease; increase
When a consumer compares the price of a good to the value of that good, he or she is really comparing: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a the price of other substitute goods. b the value of the good to the costs associated with producing the good. c the value of the good to its opportunity cost. d the price of the good to the value of other substitute goods.
c the value of the good to its opportunity cost.
Central planning of resource allocation: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a was attempted by the United States during the 2007Ð2009 financial crisis. b can succeed even if the central planners do not have perfect information on the best uses of resources. c was the dominant economic planning method used in both the former Soviet Union and China. d insures all resources are used appropriately.
c was the dominant economic planning method used in both the former Soviet Union and China.
Figure: Gun Market Reference: Ref 5-4 (Figure: Gun Market) In the gun market shown, the buyback program purchases __ guns. Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a 1,670 b 3,730 c 6,000 d 2,060
d 2,060
Which of the following explains why local supply tends to be more elastic than global supply? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a As price increases in a certain locale, it is often costly to transport more goods to that particular area, and hence supply is more elastic. b Local suppliers are small in relation to the global market. c The statement is false; local supply tends to be less elastic than global supply. d As price increases in a certain locale, goods can be brought in from other areas, which is not possible on a global scale.
d As price increases in a certain locale, goods can be brought in from other areas, which is not possible on a global scale.
Figure: Demand Curve Reference: Ref 7-1 (Figure: Demand Curve) Refer to the figure. Which point on the graph represents an unsatisfied want? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a Point B b Point A and Point B c Point A d Point C
d Point C
Which of the following statements is FALSE? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a A perfectly inelastic supply curve is vertical. b The supply curve is more elastic in the long run than in the short run. c Products that take a long time to produce, such as decades-aged Scotch whiskey, have supply curves that are less responsive to price changes. d The supply curve of oil is more inelastic in Texas than it is globally.
d The supply curve of oil is more inelastic in Texas than it is globally.
The central planning approach proved ____ because ____. Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a successful; central planners use state-of the-art military computers to efficiently allocate resources b a failure; it was never given enough time to be successfully implemented in most countries c successful; central planners, unlike CEOs, are not solely interested in maximizing profits and raising prices d a failure; central planners lack information and incentives to allocate resources efficiently
d a failure; central planners lack information and incentives to allocate resources efficiently
Assuming that bus travel is an inferior good, a decrease in consumer income, other things being equal, will cause Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a a downward movement along the demand curve for bus travel. b no change in the demand curve for bus travel. c an upward movement along the demand curve for air travel. d a rightward shift in the demand curve for bus travel.
d a rightward shift in the demand curve for bus travel.
The difference between normal and inferior goods is thatFAVORITE QUESTION Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a an increase in price will shift the demand curve for a normal good rightward and the demand curve for an inferior good leftward. b if the price of a normal good increases, individuals who buy it are poorer; for inferior goods, the opposite is true. c an inferior good is something that will not be demanded until quantities of the normal good have been exhausted. d an increase in income will shift the demand curve for a normal good rightward and the demand curve for an inferior good leftward.
d an increase in income will shift the demand curve for a normal good rightward and the demand curve for an inferior good leftward.
The great economic problem is to: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a increase resources to satisfy as many of our limited wants as possible. b equally allocate resources in order to satisfy as many of our limited wants as possible. c create unlimited resources to satisfy as many of our infinite wants as possible. d arrange our limited resources to satisfy as many of our infinite wants as possible.
d arrange our limited resources to satisfy as many of our infinite wants as possible.
How do speculators mitigate shortfalls in the equilibrium quantities traded in markets? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a by buying up unsold inventories and then selling them when there is a shortage in the market b by causing market quantities to rise and fall c by buying up items when the prices have risen d by buying up items in advance of rising prices, and then selling them in the market when prices increase
d by buying up items in advance of rising prices, and then selling them in the market when prices increase
In a demand-and-supply diagram, the market price represents the value of the: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a first satisfied want. b last unsatisfied want. c good in its next-lowest use. d good in its next-highest use.
d good in its next-highest use.
Economic theory suggests that permanent gun buyback programs: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a succeed in reducing the number of guns in circulation. b make guns less valuable. c increase the quantity of low-quality guns in circulation but decrease the quantity of high-quality guns in circulation. d increase the number of guns in circulation.
d increase the number of guns in circulation.
The supply curve for manufactured goods is usually more elastic than raw materials because production of manufactured goods can often be: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a increased at higher cost per unit by building more factories. b increased at lower cost per unit by building more factories. c decreased at the same cost per unit by building more factories. d increased at the same cost per unit by building more factories.
d increased at the same cost per unit by building more factories.
Markets work well because of the information delivered by: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a the government. b the supply curve. c the demand curve. d prices.
d prices.
Asphalt is the refined residue from crude oil. When gasoline prices are high, oil refiners pull every last drop of gasoline out of a barrel of crude. This would imply that higher gasoline prices mean a(n): Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a increased supply of asphalt, causing lower asphalt prices. b increased supply of asphalt, causing higher asphalt prices. c reduced supply of asphalt, causing lower asphalt prices. d reduced supply of asphalt, causing higher asphalt prices.
d reduced supply of asphalt, causing higher asphalt prices.
It's worthwhile to grow roses in Kenya because: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a people in Amsterdam don't cooperate with people in Kenya. b very few people have to be involved in the process of supplying roses grown there. c it's impossible to grow roses anywhere else. d the gains from growing roses in an ideal climate are greater than the costs of transporting roses around the world.
d the gains from growing roses in an ideal climate are greater than the costs of transporting roses around the world.
