economics exam 1
Quantity demanded is:
the total amount of a good that consumers desire to purchase during a given time period, in a given geographic area
When one speaks on "demand" in a particular market, she is referring to:
the whole demand curve
In an experiment in welfare administration, residents of a poor neighborhood are given certain number of clothing stamps each month in addition to their regular food stamps. Soon we observe people trading clothing stamps for food stamps and vice versa. After observing this, the economist would say that:
there has been an increase in allocation efficiency in the community
You pay $10 for a ticket to go to a basketball game. In order to drive to the game, you use up $1 of gas. If you had not attended the basketball game you could have spent your time fixing your car thereby saving $25 of labor costs, or used the time to help someone move and earned $20. What was the opportunity cost of attending the game?
$36
The concept of scarcity as used by economists refers to which of the following?
A situation in which there are not enough available resources to satisfy all the wants and desires of the people
Which of the following is true of theories?
A theory is a simplification of reality
Which of the following is a formal statement regarding the relationship between two or more variables that is capable of falsification?
An hypothesis
Assume that the economy produces two groups of goods: civilian goods and military goods. An advancement in technology in the production of military goods may possibly result in which of the following?
An increase in the production of civilian goods, with no increase in the production of military goods. An increase in the production of military goods, with no increase in the production of civilian goods, An increase in the production of both military goods and civilian goods
In a market system, how goods and services will be produced is determined by which of the following?
Consumers
Which of the following is the rationale for the law of increasing opportunity cost?
Economic resources are not perfectly adaptable to alternative uses
Suppose that the government increases the excise tax on beer by $10 per barrel. In which situation will the largest part of the tax increase be passed on to the consumer?
Inelastic demand for beer, elastic supply of beer
Which of the following is a statement about a negatively sloped, straight line demand curve?
It has a constant elasticity throughout its length
Jennifer usually buys three CDs per week. She expects the price of CDs to increase by 10% next week. What does the theory of demand hypothesize will happen to Jennifer's demand for CDs this week?
It increases because she expects price to be higher next week.
Which of the following statements about opportunity cost is incorrect?
Opportunity cost always involves giving up a certain amount of money to get what you want.
Assume that potatoes are an inferior good. Suppose that the level of consumer income increases, ceteris paribus. This would be predicted to result in which of the following changes in the equilibrium price and quantity of potatoes?
Price decreases, quantity decreases
Assume that consumers expect the price of automobiles to increase in the future (next period), ceteris paribus. This would be predicted to result in which of the following changes in the equilibrium price and quantity of automobiles now (this period)?
Price decreases, quantity increases
Assume that the government gives a subsidy of $5 on each bushel of wheat producers produce, ceteris paribus. This would be predicted to result in which of the following changes in the equilibrium price and quantity of wheat?
Price decreases, quantity increases
Zinc and silver are complementary goods in production. Assume that the price of zinc increases, ceteris paribus. This would be predicted to result in which of the following changes in the equilibrium price and quantity of silver?
Price decreases, quantity increases
The price of gasoline is $1 per gallon. At that price, consumers want to buy 1,000 gallons weekly and producers want to sell 2,000 gallons weekly. Which of the following will occur if the market for gasoline is a competitive market?
Price will fall below $1, and producers will tend to offer less than 2,000 gallons
Which of the following is the primary identifying characteristic of capitalism?
Private ownership of the means of production (resources)
Which of the following is a reason why consumers want to buy more of a good when its price decreases, ceteris paribus?
The lower price increases the purchasing power of consumers income enabling them to buy more
Suppose you are the oil minister of an oil producing nation. If you want to maximize your total revenue from selling oil, which price would you charge?
The price at which the coefficient of price elasticity of demand for oil is equal to one
Which of the following would most likely increase the supply of college textbooks?
There has been an advancement in book production technology.
If an increase in the price of good X causes the demand for good Y to decrease, it can be concluded that:
X and Y are complements
An example of the term double coincidence of wants is:
a gardener who would like legal services and a lawyer who hates to get his hands dirty, but enjoys having flowers in his garden
"When I was poor and starting my work career I drank a lot of Coors beer and not much Sam Adams beer. Now that I have a high paying job, I rarely drink Coors beer; rather I drink a lot of Sam Adams beer" This statement suggests that for this person Coors beer is:
an inferior good
In a market system, which of the following determines who gets what is produced?
a. The amount of resources that individuals own. b. The prices attached to the resources that individuals own
A rightward shift in the demand for popcorn could be the result of:
an increase in income
The elasticity of demand for a good is likely to:
be higher the longer a price change persists, Second law of demand (so the longer a good has an increased price the more elastic the demand will be) (thepublic will be less and less willing to pay such a high price)
If the price of potato chips increases, the demand for potato chip dip will:
decrease because the goods are complements.
An economic system:
is a social mechanism that organizes and coordinates economic activity
An economic incentive:
is anything that affects the benefit or cost of choosing an alternative. will influence the choices that rational individuals make. is an important concept in economics that can used to explain how people behave in the marketplace.
Of the following , which is a reason why the quantity supplied of good X increases when the price of good X increases, ceteris paribus. When the price of good X increases:
it becomes more profitable for producers to employ more resources in the production of good X
In order to achieve production efficiency:
minimum physical output must be produced with a given amount of resources
The demand for salmon is:
more elastic than the demand for fish because there are more substitutes for salmon than for fish in general
When economists say that people behave rationally, this means:
people respond in predictable ways to changes in costs and benefits.
Suppose that an automobile dealer reduces car prices by 10% and finds that he sells 15% more automobiles. The demand for her automobiles is:
price elastic
Opportunity cost exists because:
resources are limited and human wants and desires are unlimited, which requires individuals to make choices.
Which of the following is not a resource?
tax payments
Suppose that you are on a committee considering ways to raise revenue for your college athletic program. You would recommend increasing the price of football tickets only if you thought:
the demand for football tickets was price inelastic
A supermarket raises the price of its meat and finds that the total revenue that its meat department makes decreases. We can conclude that:
the demand for meat is price elastic
If a government tax official is interested in generating maximum possible tax revenue from placing an excise tax on a good, she should place the tax on a good for which:
the demand is price inelastic
In rejecting the call for a reduction in the price of textbooks, a major publisher says: "lowering the price won't sell a single additional book." She must believe the demand for textbooks is:
unit elastic.