📈Econ Midterm
Pizza is a normal good if the demand
for pizza rises when income rises
The imposition of a binding price ceiling on a market causes
quantity demanded to be greater than quantity supplied.
Cross-price elasticity of demand measures how
the quantity demanded of one good changes in response to a change in the price of another good
Assume Lianna buys coffee beans in a competitive market. It follows that
Lianna cannot influence the price of coffee beans even if he buys a large quantity of them.
Martin, a U.S. citizen, travels to Mexico and buys a newly manufactured motorcycle made there. His purchase is included in
Mexican GDP, but it is not included in U.S. GDP
The current price of blue jeans is $30 per pair, but the equilibrium price of blue jeans is $25 per pair. As a result, which of the following statements is not true?
There is a shortage of blue jeans at the $30 price.
Suppose buyers of fountain drinks are required to send $0.50 to the government for every fountain drink they buy. Further, suppose this tax causes the effective price received by sellers of fountain drinks to fall by $0.20 per drink. Which of the following statements is correct?
This tax causes the demand curve for fountain drinks to shift downward by $0.50 at each quantity.
Refer to Figure 6-5. Which of the following statements is not correct?
When the price is $6, there is a surplus of 8 units.
Refer to Figure 4-4. The movement from point A to point B on the graph is called
an increase in quantity supplied
Refer to Figure 4-4 . The movement from point A to point B on the graph is caused by
an increase in the price of the good
If a decrease in income increases the demand for a good, then the good is
an inferior good
If the demand for a product increases, then we would expect equilibrium price
and equilibrium quantity both to increase
Refer to Figure 6-3. A government-imposed price of $24 in this market is an example of a
binding price floor that creates a surplus.
Refer to Scenario 5-2. The equilibrium price will
decrease in both the aged cheddar cheese and bread markets.
Refer to Table 4-2 . If these are the only four buyers in the market, then when the price increases from $1.00 to $1.50, the market quantity demanded
decreases by 7 units.
For which of the following goods is the income elasticity of demand likely highest?
diamonds
The law of demand states that, other things equal, when the price of a good
falls, the quantity demanded of the good rises.
Refer to Figure 23-1. Which of the following pairs correctly identify W and Y?
firms and households
Refer to Scenario 5-2. The change in equilibrium quantity will be
greater in the bread market than in the aged cheddar cheese market.
Refer to Figure 23-1. Which of the following pairs correctly identify X and Z?
markets for factors of production and markets for goods and services
Refer to Table 4-3. If the law of supply applies to this good, then Q1 could be
150
Refer to Table 4-4. If these are the only four sellers in the market, then the market quantity supplied at a price of $4 is
28 units
Refer to Table 4-2 . If these are the only four buyers in the market, then the market quantity demanded at a price of $1 is
31 units
Refer to Table 2-1. If the production possibilities frontier is bowed outward, then which of the following could be the maximum number of tennis balls produced when 300 tennis rackets are produced?
4,500
Studies indicate that the price elasticity of demand for cigarettes is about 0.4. A government policy aimed at reducing smoking changed the price of a pack of cigarettes from $2 to $6. According to the midpoint method, the government policy should have reduced smoking by
40 percent
Refer to Figure 2-3 . I t is not possible for this economy to produce at point
C (because it is outside the curve)
Suppose the income of buyers in a market for an inferior good decreases and a technological advancement occurs also. What would we expect to happen in the market?
Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.
U.S. GDP and U.S. GNP are related as follows:
GNP = GDP - Income earned by foreigners in the U.S. + Income earned by U.S. citizens abroad.
Emily and Betsey are economists. Emily thinks that the wealthiest 10 percent of the U.S. population should be taxed a rate higher than the rest of society because they can better afford it. Betsey thinks that everyone should be taxed at the same rate because that is the fairest scenario and the wealthy should not be penalized for their success. In this example, Emily and Betsey
have different normative views about tax policy.
Refer to Table 2-2. Which of the following statements is correct?
he opportunity cost of an additional 200 shoes increases as more shoes are produced
The term economists use to describe a situation in which the economy's overall price level is rising is
inflation
To say that a price ceiling is nonbinding is to say that the price ceiling
is set above the equilibrium price.
An economy's production of two goods is efficient if
it is impossible to produce more of one good without producing less of the other.
Refer to Figure 6-8 . When the price ceiling is enforced in this market, and the supply curve for gasoline shifts from S 1 to S 2 , the resulting quantity of gasoline that is bought and sold is
less than Q3
The supply of a good will be more elastic, the
longer the time period being considered
The GDP deflator is the ratio of
nominal GDP to real GDP multiplied by 100
Refer to Figure 4-10. Which of the following movements would illustrate the effect in the market for chocolate chip cookies of an improved high-speed mixer that allows bakers to produce cookies in less time?
point A to point B.
A legal minimum on the price at which a good can be sold is called a
price floor
An example of a perfectly competitive market would be th
soybean market
Ashley bakes bread that she sells at the local farmer's market. If she purchases a new convection oven that reduces the costs of baking bread, the
supply curve for Ashley's bread will shift right. OR supply of Ashley's bread will increase
Which of the following areas of study typifies macroeconomics as opposed to microeconomics?
the effect on the economy of changes in the nation's unemployment rate
If a price floor is not binding, then
the equilibrium price is above the price floor
If marijuana were legalized, it is likely that there would be an increase in the demand for marijuana. If demand for marijuana is inelastic and the supply of marijuana is perfectly elastic, this will result in
the same price and higher total revenue from marijuana sales.
A key determinant of the price elasticity of supply is the
time horizon
Refer to Table 23-2. What were country A's government purchases in 2019?
$1,975
Refer to Table 2-3. Which of the following combinations of corn and wheat is not currently attainable but would be attainable if there was an improvement in overall production technology?
1,000 bushels of corn and 2,200 bushels of wheat
Refer to Figure 6-11. Suppose a tax of $2 per unit is imposed on this market. What will be the new equilibrium quantity in this market?
Between 60 units and 100 units
What would happen to the equilibrium price and quantity of lattés if consumers' incomes rise and lattés are a normal good?
Both the equilibrium price and quantity would increase.
Refer to Figure 2-9. Which of the following conclusions should not be drawn from observing this graph?
No other factors besides the frequency of service affect the number of passengers.
Joe and Jim purchase vegetables at a grocery store, but Jim also grows vegetables in his backyard. Regarding these two practices, which of the following statements is correct?
Only Joe's and Jim's grocery store purchases are included in GDP.
Refer to Figure 4-10. Which of the following movements would illustrate the effect in the market for swimming lessons of an increase in the incomes of parents with school-aged children?
Point A to Point D
What would happen to the equilibrium price and quantity of coffee if the wages of coffee-bean pickers fell and the price of tea fell?
Price would fall, and the effect on quantity would be ambiguous.
Refer to Figure 2-4, Graph (a) and Graph (b) . Which of the following is not a result of the shift of the economy's production possibilities frontier from Graph (a) to Graph (b) ?
Production of one donut and four cups of coffee becomes efficient.
Suppose that when the price of a 16 oz. to-go cup of gourmet coffee is $4.25, students purchase 750 cups per day. If the price decreases to $3.75 per cup, which of the following is the most likely outcome?
Students would purchase more than 750 cups per day.
What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce them?
The equilibrium price would decrease, and the equilibrium quantity would increase.
Refer to Table 4-5. If the four suppliers listed are the only suppliers in this market and the market quantity demanded is 300 cases when the price is $3.00, which of the following statements is correct?
The market is in equilibrium at a price of $3.00.
Refer to Figure 4-3 . The shift from Db to Da in the market for potato chips could be caused by
a decrease in income, assuming that potato chips are a normal good
GDP and GNP are identical when
all domestic production is by domestically owned producers and no foreign production is carried out by domestic producers.
Refer to Figure 4-1 . The movement from point A to point B on the graph shows
an increase in quantity demanded
Eva wants to create a graph containing the prices of concert tickets and the corresponding quantities of concert tickets demanded by customers. She should use a
coordinate system
In the circular-flow diagram, which of the following is not a factor of production?
money
Refer to Figure 2-4, Graph (a) . Production at point K is
possible but inefficient
Which of the following events would cause the price of oranges to fall?
The price of land throughout Florida decreases, and Florida produces a significant proportion of the nation's oranges.
Suppose the United States had a short-term shortage of farmers. Which market mechanisms would adjust to remove the shortage?
The prices of food and the wages of farmers would adjust.