Econ Mock-Midterm

A government tax per unit of output reduces supply.

True

If two goods are substitutes, a decline in the price of one will cause a decrease in the demand for the other.

True

Refer to the above diagram for the milk market. in this market, the equilibrium price is _____ and equilibrium quantity is ______.

A: $1.50 per gallon ; 28 Million gallons

Refer to the diagram and assume a single good. If the price of the good increased from $5.70 to $6.30 along D1. the price elasticity of demand along this portion of the demand curve would be:

A: 1.2

Fred just purchased an expensive new refrigerator and is considering purchasing the overpriced warranty. in making his decision on the warranty, Fred ignores better ways that his money could be spent, including paying off high-interest credit card debt. According to the prospect theory, the process that leads Fred to ignore the debt and buy the over priced warranty is:

A: Anchoring

Which of the following is the best example of a system 2 decision and action?

A: Chuck, who has contemplated a job change for a month and has offers choose to quit when his boss makes him mad.

Refer to the diagram of the market for products X. Curve St embodies all costs (Including externalities) , and Dt embodies benefits (including externalities) associated with the production and consumptions of X.Assuming the equilibrium output is Q2. We can conclude that the existence of external:

A: cost has resulted in an overallocation of resources to X

The financing of health care through insurance has

A: resulted in consumers directly paying less than the full price of health care.

Examples of Pre-commitments to deal with people's time inconsistency problems include the following, EXCEPT

B: Debit Card Accounts

The state legislature has cut Gigantic State University's appropriations. GSU's Board of Regents decides to increase tuition and fees to compensate for the loss of revenue. The board is assuming that the :

B: Demand for education at GSU is Inelastic.

Refer to the diagram, Which one of the following might shift the marginal cost curve from MC1 to MC2?

B: Improve technology for reducing pollution

Price per Ticket Quantity Demanded $13 1,000 11 2,000 9 3,000 7 4,000 5 5,000 3 6,000 Refer to the information. Over the $7-$5 price range, demand is:

B: Inelastic

A state government wants to increase the taxes of cigarettes to increase tax revenue. because cigarettes are addictive, we would expect its demand to be

B: Inelastic. Thus, the government's cigarette tax revenues would rise with a tax increase

Refer to the Diagram. rent controls are best illustrated by:

B: Price A

A manufacturer of frozen pizzas found that total revenue decreased when price was lowered from $5 to $4. it was also found that total revenue decreased when price was raised from $5 to $6. Thus,

B: The demand for pizza is elastic above $5 and inelastic below $5.

If there are external benefits associated with the consumption of a good or service:

B: the private demand curve will underestimate the true demand curve

The graph below shows the market for tickets to a "Final Four" sports event. Assume that there is only one kind of ticket to the event A Scalpers market will exist if the event organizers set the official ticket price at

C: $20

The question below is based on the following four sets of data-pairs: (1) A and B (2) C and D (3) E and F (4) G and H. In each set, the independent variable is in the left column and the dependent variable is in the right column. which of the four sets of data-pairs shows an inverse relationship between the independent and dependent variable?

C: 1 and 3

Refer to the provided supply and demand graph for a public good. Which line segment would indicate the amount by which the marginal benefit of this public good exceeds the marginal cost at a certain quantity?

C: DA

Suppose the total revenue curve is derived from a particular linear demand curve. That demand curve must be

C: Elastic for price increases that reduce quantity demanded from 4 units to 3 units

When DVD Players start becoming obsolete, then to potential thieves, the

C: Marginal Utility of stealing them decreases

(consider this) refer to the diagram. The U.S. response to the events of September 11, 2001. is illustrated by:

C: Move from X to Y on production possibilities curve AB.

"Time Inconsistency" refers to the

C: Tendency to regularly misjudge in the present what you will do about the future

(Last Word) Most people do not steal, beacuse

C: Their marginal cost, including guilt cost, are too high

The theory of consumers behavioral assumes that consumers attempt to maximize

C: Total Utility

A nations production possibilities curve might shift to the left (Inward) as a result of

D: the depletion of its soil fertility due to over planting and over grazing

Refer to the diagram. The slope of curve ZZ at point A is approximately

D: +2 ^1/2

Consider the supple and demand curves depicted in the diagram above. If the government imposed a price ceiling of $15, then buyers will be intending to buy______ but, they will be able to legally buy_______

D: 36 Units, 24 Units

Which of the following situation is NOT an example of market failure?

D: Ben cannot afford to buy a high-end Mercedes Benz Luxury Car.

(Consider this) When the federal government started requiring restaurants to print calorie counts next to the menu items, some people increased their consumption of higher -calorie items. Which of the following best explains this Phenomenon?

D: Consumers are more interested in maximizing calories per dollar than health per dollar

The question below is based on the following four sets of data-pairs. (1) A and B (2) C and D (3) E and F (4) G and H, in the left column it shows the independent variables. in the right column it shows the Dependent variables. The Linear equation for the relationship in data set 3 above is:

D: F=12 -2E

A consumer is making purchases of products Alpha and Beta such that the marginal utility if products Alpha is 30 and the marginal utility of Beta is 40. The price of the product Alpha is $5, and the price of product Beta is $10. The Utility-maximizing rules suggest that, to stay within a given budget constraint, this consumer should:

D: Increase consumption of product Alpha and Decrease consumption of product Beta.

According to behavioral economics, the difficulty among many people to stick to a diet or an exercise plan is partly explained by:

D: Myopia

The construction of demand and supply curves assumes that they primary variable influencing decisions to produce and purchase goods is

D: Price

Suppose the price elasticity coefficients of demand are 1.43, 0.67, 1.11, and 0.29 for products W, X, Y, and Z respectively. A 1 percent decrease in price will increase total revenue in the case(s) of:

D: W and Y

New Norman University has found it necessary to institute a crime-control program on its campus to deal with the high costs of theft and vandalism. The University is now considering several alternative levels if crime control. This table shows the expected total annual costs and benefits of these alternatives

D: there would be an underallocation of resources to crime control

A nation's production possibilities curve shows the maximum combinations of resources that a nation can use:

False

If consumers are convinced by ads that Brand X has a lot more value than they originally thought, they the MU/P of X will decrease.

False

In a well-functioning cap-and-trade system for pollution rights, society benefits because pollution will be brought down to insignificant levels

False

Refer to the diagram. Given production possibilities curve a, the combination of civilian and war goods indicated by point X is unattainable to this economy

False

Seller's sense of fairness is always consistent with the notion of rational self-interest of neoclassical economics:

False

The availabilty heuristic refers to people purchasing what is most easily accessible

False