micro exam
(Table: Consumer Surplus) Look at the table Consumer Surplus. If the price of a ticket to see The Nutty Nutcracker is $50, Lois's consumer surplus is:
$50
If people demand more of product A when the price of B falls, then A and B are: A. complements. B. not related. C. inferior goods. D. substitutes.
A
A good is normal if which of the following is true? A. When income increases, the demand increases. B. When income increases, the demand decreases. C. Income and the demand are unrelated. D. When income increases, the demand remains unchanged
A
A newspaper story recently reported that the price of new cars has decreased and the quantity of new cars sold has dropped. The new price and quantity could have been caused by: A. a decrease in buyers' incomes. B. an increase in production costs. C. an increase in buyers' incomes. D. a decrease in production costs.
A
A recent news story reported that OPEC is expected to decrease the supply of oil next summer. Summer is traditionally a time of increased demand for oil because of the many families driving and flying to vacation sites. What would be the combined effect of these two events on the summer market for gasoline? A. an increase in the price and an unpredictable change in the quantity B. an unpredictable change in the price and a decrease in the quantity C. an unpredictable change in both the price and the quantity D. an increase in the price and the quantity
A
If the estimated price elasticity of demand for foreign travel is 4, then: A. a 20% decrease in the price of foreign travel will increase the quantity demanded by 80%. B. a 10% increase in the price of foreign travel will increase the quantity demanded by 40% C. the demand for foreign travel is inelastic. D. a 20% increase in the price of foreign travel will increase the quantity demanded by 80%.
A
After you graduate from college, you open a business selling computers. Many other businesses in your city sell similar computers. Based on this information, the price elasticity of demand for the computers that your business sells will be: A. highly elastic. B. 0. C. highly inelastic. D. 1.
A
An increase in the price of hamburger would probably result in ________ in the demand for hamburger buns. A. a decrease B. an increase C. no change D. random fluctuation
A
Economists in general agree that rent controls are: A. an inefficient but sometimes effective way to help low-income families. B. the only way to solve the problem of poverty. C. an efficient method of dealing with the shortages created during price ceilings. D. an efficient and equitable way to help low-income families.
A
Finland has a comparative advantage in producing: (Sweden produces 100k herring and 10k cell phones; finland produces 50k herring and 10k cell phones) Reference: Ref 2-21 (Table: Comparative Advantage I) Look at the table Comparative Advantage I. Finland has an absolute advantage in producing: A. neither cell phones nor herring. B. both cell phones and herring. C. herring only. D. cell phones only.
A
Gains from trade arise because of: A. specialization in production. B. individual choice. C. marginal analysis. D. specialization in consumption.
A
If the opportunity cost of manufacturing machinery is lower in the United States than in Britain and the opportunity cost of manufacturing sweaters is higher in the United States than in Britain, then the United States will: A. import sweaters from Britain and export machinery to Britain. B. export sweaters to Britain and import machinery from Britain. C. import both sweaters and machinery from Britain. D. export both sweaters and machinery to Britain.
A
If the price elasticity of supply is greater than 1, then: A. supply is price-elastic. B. supply is price unit-elastic. C. the quantity supplied is relatively unresponsive to price changes. D. supply is price-inelastic.
A
If the price of mozzarella cheese (an ingredient in pizza) declines, there would be: A. an increase in the supply of pizza. B. an increase in the quantity of pizza supplied. C. a decrease in the supply of pizza. D. no change in the supply of pizza.
A
If your purchases of shoes decrease from 11 pairs per year to 9 pairs per year when your income increases from $19,000 to $21,000 a year, other things equal, then, for you, shoes are considered: A. an inferior good. B. a complementary good. C. a normal good. D. a substitute good.
A
If your purchases of shoes remain constant at 9 pairs per year when the price of shirts increases from $8 to $12, for you, shoes and shirts are considered: A. unrelated goods. B. complementary goods. C. substitute goods. D. inferior goods.
A
In Colorado, there has been a drought, and rural communities are fighting with urban areas over water. This statement best represents this economic concept: A. Resources are scarce. B. Government policies can change spending. C. When markets don't achieve efficiency, government intervention can improve society's welfare. D. Resources should be used as efficiently as possible to achieve society's goals.
A
In Europe, the minimum wage has led to all of the following except: A. European governments hiring the surplus of workers. B. a proliferation of tiny companies in Italy. C. high unemployment, especially among young workers. D. widespread evasion of the minimum wage law in the black market for labor.
A
In Ventura County, California, strawberry production is limited by the number of acres available for agriculture production. This statement best represents this economic concept: A. Resources are scarce. B. "How much" is a decision at the margin. C. There are gains from trade. D. Resources should be used as efficiently as possible to achieve society's goals.
A
In terms of the production possibility frontier, inefficient use of available resources is shown by: A. a point inside the production possibility frontier. B. a movement from one point to another along the production possibility frontier. C. an increase in the labor force growth rate. D. an inward shift of the production possibility frontier due to the lack of opportunity.
A
Jeanette is willing to pay $100 for the first pair of shoes, $80 for the second pair, $50 for the third, and $30 for the fourth. If shoes cost $50, Jeanette will buy ________ pairs of shoes and her total consumer surplus equals ________. A. 3; $80 B. 4; $80 C. 3; $230 D. 4; $110
A
Mountain River Adventures offers whitewater rafting trips down the Colorado River. It costs the firm $100 for the first raft trip per day, $120 for the second, $140 for the third, and $160 for the fourth. If the market price for a raft trip was $120 but has now increased to $150, the gain in producer surplus is equal to: A. $70. B. $90. C. $80. D. $20.
A
Pizza is a normal good. If students' incomes at your college increase, the effect on pizza would be: A. an increase in the demand. B. an increase in the quantity demanded. C. no change in the demand. D. a decrease in the demand.
A
Quota limits cause: A. the demand price to be greater than the supply price. B. the quantity demanded to be greater than the quantity supplied. C. the demand price to be less than the supply price. D. the quantity demanded to be less than the quantity supplied.
A
Rapidly increasing health costs have been a major political concern since at least 1992. Suppose the government sets the maximum price for a normal doctor's visit at $20 to control rising health costs but the current market price is $40. What will happen? A. More people will try to visit the doctor, but there will be fewer doctors willing to see patients at that price. B. More people will be able to see the doctor, since the price is lower. C. The same number of people will try to visit the doctor, and the same number of doctors are willing to see patients at that price. D. Fewer people will try to see the doctor, and fewer doctors are willing to see patients at that price.
A
Specialization and trade should lead to all of the following except: A. a decrease in total economic output. B. higher living standards. C. the exchange of goods and services in markets. D. individuals learning specific skills and earning a salary.
A
Suppose the U.S. government imposes a binding quota on the number of Japanese-made cars allowed into the United States. We would expect the price of Japanese cars to ________ and the price of U.S.-made cars to ________. A. increase; increase B. decrease; increase C. decrease; decrease D. increase; decrease
A
Suppose the United States removes the current sugar quotas and the market price of sugar drops. In the candy bar market, we would expect consumer surplus to: A. increase. B. not change. C. Consumer surplus cannot be determined without information about the supply curve. D. decrease.
A
The dictator of a small country restricts the price of cars to an amount less than or equivalent to $1,200 (a price below the equilibrium price for cars). Such a policy would be an example of a: A. price ceiling. B. price floor. C. tariff. D. quota.
A
The government decides to impose a price ceiling on a good because it thinks the market-determined price is "too high." If the government imposes the price ceiling below the equilibrium price: A. consumers will respond to the lower price and wish to purchase more of the good than at the equilibrium price. B. consumers will be able to purchase more of the good after the price ceiling is imposed. C. it will not be binding. D. producers will respond to the lower price and offer more units for sale.
A
The models used in economics: A. emphasize basic relationships by abstracting from complexities in the everyday world. B. are usually limited to variables that are directly related. C. are essentially not reliable because they are not testable in the real world. D. are of necessity unrealistic and not related to the real world.
A
The persistent unwanted surplus that results from a price floor creates inefficiencies that include all of the following except: A. inefficiently low quality. B. inefficient allocation of sales among sellers. C. wasted resources. D. the temptation to break the law by selling below the legal price.
A
The price elasticity of demand for lettuce has been estimated to be 2.58. If an insect infestation destroys 10% of the nation's lettuce crop, how will that affect total revenue from lettuce, all other things unchanged? A. Total revenue will fall. B. Total revenue will rise. C. Total revenue will remain unchanged. D. Not enough information is given to answer the question.
A
UESTION 95 If the price is below the equilibrium price in the market for grapefruit, total surplus: A. will decrease. B. may change, but we cannot determine the change without more information. C. will not change. D. will increase.
A
We can measure total consumer surplus for good X as: A. the sum of the individual consumer surpluses for all buyers of X. B. the area bounded by the demand curve for X and the two axes. C. the area above the supply curve for X. D. the area above the demand curve for X and below the price of X.
A
When price controls take the form of maximum prices set below the equilibrium price, they are: A. price ceilings. B. price floors. C. illegal. D. equal to the demand price.
A
When the United States and Mexico trade: A. both Mexico and the United States will be better off. B. the United States will be worse off because wages in Mexico are so low. C. Mexico will be worse off because the United States is a stronger economic power. D. both Mexico and the United States will be worse off.
A
When the price of chocolate-covered peanuts increases from $1.55 to $2.00, the quantity demanded decreases from 220 to 180. If the price is $1.55, total revenue is ______, and if the price is $2.00, total revenue is ______. A. $341; $360 B. $440; $279 C. $341; $279 D. $360; $440
A
When there is a new medical report extolling the health advantages of grapefruit, total producer surplus in the grapefruit market: A. will increase. B. may change, but we can't tell how. C. will remain the same. D. will decrease.
A
Which of the following is an example of marginal analysis? A. What additional output does a family business produce when it hires one more worker? B. Should a commuter take the bus to work rather than driving. C. How do tax cuts change the growth rate of median income? D. When a large corporation lays off workers, how do profits change if sales remain constant?
A
Which of the following is likely to cause a rightward shift in the demand for home-delivered pizza? A. a larger population B. a higher price of pepperoni C. a lower price of pizza D. a lower price of fast-food hamburgers
A
Which of the following will not cause an increase in demand for good X? A. a decrease in the price of good X B. an increase in income if good X is a normal good C. an increase in consumers' taste for good X D. a decrease in income if good X is an inferior good
A
You can spend $100 on either a new economics textbook or a new CD player. If you choose to buy the new economics textbook, the opportunity cost is: A. your enjoyment of the new CD player. B. both the $100 and the your enjoyment of the new CD player. C. $100. D. impossible to determine.
A
Because of trade, a country may: A. avoid opportunity costs. B. find that its production possibility frontier will shift outward. C. consume outside its production possibility frontier. D. consume inside its production possibility frontier.
C
Christine has a linear demand curve for candy. If she wants to see her consumer surplus ________, she would like to see a ________ in the market price of candy. A. not change; decrease B. increase; increase C. increase; decrease D. decrease; decrease
C
(Figure: Demand and Supply of Gasoline) Look at the figure Demand and Supply of Gasoline. Given the equilibrium after a change in supply from S1 to S2: A. the price will remain constant. B. at the old price of $2.50, there will be pressure for the price to fall. C. the new price will be $2.00. D. the new quantity will be 60
B
A decrease in the price of a good will result in: A. an increase in supply. B. an increase in the quantity demanded. C. an increase in demand. D. more being supplied.
B
A good is inferior if which of the following is true? A. When income increases, the demand remains unchanged. B. When income increases, the demand decreases. C. Income and the demand are unrelated. D. When income increases, the demand increases.
B
A price ceiling is: A. the difference between the quantity supplied and quantity demanded. B. a maximum price sellers are allowed to charge for a good or service. C. a minimum price buyers are required to pay for a good or service. D. the deadweight loss caused by an inefficiently low quantity.
B
A price that the government guarantees farmers will receive for a particular crop is: A. an export price (export subsidy). B. a price floor (price support). C. a price ceiling. D. a deficiency price.
B
A production possibility frontier illustrates the ________ facing an economy that ________ only two goods. A. prices; sells B. trade-offs; produces C. shortages; produces D. trade-offs; consumes
B
An inward shift in the U.S. economy's production possibility frontier could represent which of the following? A. U.S. workers moving from New Jersey to Massachusetts B. U.S. workers moving to Canada C. U.S. economic growth as workers move to different states D. U.S. economic growth
B
Each of the following is a source of inefficiency from a rent-control price ceiling except: A. inefficiently low quantity of the good exchanged. B. inefficiently high quality of the good being sold. C. inefficient allocation of the good to consumers. D. wasted resources of consumers searching for the good.
B
Economists are generally in support of: A. subsidizing exports. B. free international trade. C. tariffs to restrict trade. D. government restrictions on trade
B
Economists generally believe that a country should specialize in the production of a good or service if: A. the country can produce the product using more resources than any other country. B. the country can produce the product while forgoing fewer alternative products than any other country. C. the production possibility frontier is larger than that of any other country. D. the production possibility frontier is smaller than that of any other country.
B
Rent controls in New York City cause all of the following except: A. wasted resources resulting from the opportunity cost of time associated with trying to find an apartment. B. an increase in the quantity supplied of rent-controlled apartments. C. black markets. D. inefficiently low quality.
B
Gas prices recently increased by 25%. In response, purchases of gasoline decreased by 5%. Based on this data, the price elasticity of demand for gas is: A. 2. B. 0.2. C. 0.5. D. 5.
B
If all of the opportunities to make someone better off (without making someone else worse off) have been exploited, an economy is A. inefficient. B. efficient. C. marginally optimal. D. equitable.
B
If chicken and beef are substitutes, then a fall in the price of chicken will bring about: A. an increase in the demand for beef. B. a decrease in the demand for beef. C. a decrease in the quantity demanded of beef. D. no change in the demand for beef.
B
If steak and potatoes are complements, when the price of steak goes up, the demand curve for potatoes: A. shifts to the right. B. shifts to the left. C. shifts to the right and then moves back. D. stays the same.
B
If the quantity supplied in a market exceeds the quantity demanded in a market, we would expect prices to: A. rise. B. fall. C. stay the same. D. rise in order to clear the market.
B
If total surplus falls, which of the following must have occurred? A. There was an increase in demand or a decrease in supply. B. There was a decrease in demand or a decrease in supply. C. There was an increase in demand and an increase in supply. D. There was a decrease in demand and an increase in supply.
B
Sometimes airlines raise ticket prices as the flight departure date approaches in the hope of increasing revenue. The airlines raise their prices on the assumption that: A. consumers are not aware of airline prices. B. consumer demand becomes less price-elastic as departure time approaches. C. consumer demand becomes more price-elastic as departure time approaches. D. consumer demand is unrelated to prices.
B
Suppose the price elasticity of demand for cheeseburgers equals 0.37. This means the overall demand for cheeseburgers is: A. price elastic. B. price inelastic. C. price unit-elastic. D. perfectly price inelastic.
B
The consumers' willingness to pay for a good is used to derive the __________ for that good. A. supply curve B. demand curve C. producer surplus D. cost of production
B
The cross-price elasticity of demand for Coke with respect to the price of Pepsi has been estimated to be 0.61. If the price of Pepsi falls by 10% in a period, how will that affect the demand for Coke in that period, all other things unchanged? A. The demand for Coke will not change because many people prefer Coke to Pepsi. B. The demand for Coke will decrease by 6.1%. C. The demand for Coke will decrease but by less than 6.1%. D. The demand for Coke will rise.
B
The demand for meals at a local Applebee's will shift to the left if: A. local incomes increase and Applebee's is a normal good. B. the Olive Garden offers a 10% discount coupon in the local newspaper. C. the price of a meal at Applebee's rises. D. the price of gasoline falls in the local area.
B
The dictator of a small country restricts the price of cars to an amount less than or equivalent to $1,200 (a price below the equilibrium price for cars). Such a policy would be an example of a: A. price ceiling. B. price floor. C. tariff. D. quota.
B
The effect of an increase in productive inputs such as labor and capital can be shown by: A. an inward shift of the production possibility frontier. B. an outward shift of the production possibility frontier. C. a point inside of the production possibility frontier. D. a movement from one point to another along the production possibility frontier.
B
The income elasticity of demand for peaches has been estimated to be 1.43. If income grows by 15% in a period, how will that affect total revenue from peaches in that period, all other things unchanged? A. Total revenue will remain unchanged. B. Total revenue will rise. C. Not enough information is given to answer the question. D. Total revenue will fall.
B
The price elasticity of demand is computed as the percentage change in the: A. quantity demanded divided by the percentage change in income. B. quantity demanded divided by the percentage change in the price. C. price divided by the percentage change in the quantity demanded. D. quantity demanded divided by the percentage change in the quantity supplied.
B
The price elasticity of supply is computed as the percentage change in the: A. quantity supplied divided by the percentage change in consumer income. B. quantity supplied divided by the percentage change in the price. C. quantity supplied divided by the percentage change in the quantity demanded. D. price divided by the percentage change in the quantity supplied.
B
The production possibility frontier will shift outward for all of the following reasons except: A. an increase in worker productivity. B. an increase in the unemployment rate. C. an increase in the labor force. D. an improvement in technology.
B
To be binding, a price ceiling must be set at a price: A. the same as the equilibrium price. B. lower than the equilibrium price. C. any price ceiling is binding. D. higher than the equilibrium price.
B
Total revenue is A. total sales less total cost. B. the price of a good times the quantity of the good that is sold. C. the price effect times the quantity effect. D. the price of a good divided by the amount of the good sold.
B
We have to make choices because: A)we have unlimited income. B)resources are scarce. C)resources are infinite D)with good planning, trade-offs can be avoided.
B
We predict the long-run price elasticity of demand of gasoline would be ________ the short-run price elasticity of demand of gasoline. A. less than B. larger than C. not comparable to D. equal to
B
When the minimum wage increases: A. fewer workers are willing to work off the books. B. unemployment among unskilled workers increases. C. unemployment among skilled workers decreases. D. employment of unskilled workers increases.
B
When the price of gas goes down and the demand for tires goes up, a likely possibility is that tires and gas are: A. both inexpensive. B. complements. C. substitutes. D. both expensive.
B
Which of the following will not cause an increase in the supply of good X? A. a decrease in the price of inputs used to produce good X B. an increase in the price of inputs used to produce good X C. an increase in the price of good Y, a substitute D. an improvement in the technology used to produce good X
B
Which of the following would not cause the supply curve to shift? A. a change in suppliers' expectations of future prices B. a change in the price of the good C. a change in the technology of production D. a change in factor costs
B
f there is an increase in supply, total surplus: A. will remain the same. B. will increase. C. will decrease. D. may change, but we can't tell how.
B
Coffee and tea are substitutes. If there is an increase in the price of coffee, total surplus in the tea market: A. may change, but we cannot determine the change without more information. B. will decrease. C. will increase. D. will not change
C
A decrease in supply means: A. that more will be supplied at every price. B. that less will be demanded at every price. C. a shift to the left of the entire supply curve. D. a movement down the supply curve as prices go down.
C
A friend comes up to you and offers to give you a free ticket to the local professional team's baseball game that night. You decide to attend the game. The game takes five hours and costs you $15 for transportation. If you had not attended the game, you would have worked at your part-time job for $8 an hour. What is the cost to you of attending the game? A. $40 B. The cost is zero—the ticket is free. C. $55 D. $65
C
A local restaurant has estimated that the price elasticity of demand for meals is equal to 2. If the restaurant increases menu prices by 5%, they can expect the number of customers to decrease by ________and total revenue to ________. A. 2.5%; fall B. 10%; increase C. 10%; fall D. 5%; stay constant
C
A major state university in the South recently raised tuition by 12%. An economics professor at this university asked his students, "How many of you will transfer to another university because of the increase in tuition?" One student out of about 300 said that he or she would transfer. Based on this information, the price elasticity of demand for education at this university is: A. 0. B. 1. C. highly inelastic. D. highly elastic.
C
A new fast-food restaurant offered a free meal (valued at $5) a week for a year to its first 100 customers. Ramona camped out for 48 hours before the opening to be one of the first 100 customers. The cost of the free meal a week for a year for Ramona was: A. The cost is impossible to determine. B. $260. C. whatever she would have done with those 48 hours. D. zero.
C
A shift of the demand curve for thin-crust pizza would not be caused by a change in: A. the price of thin-crust pizza. B. the popularity of thin-crust pizza. C. the price of thick-crust pizza. D. buyers' incomes.
C
After graduation from college, you might have an increase in your income from a new job. If, as a result, you decide that you will purchase more T-bone steak and less hamburger, then for you hamburger would be considered: A. a complementary good. B. a normal good. C. an inferior good. D. a substitute good.
C
Along a given supply curve, an increase in the price of a good will: A. decrease producer surplus. B. increase consumer surplus. C. increase producer surplus. D. decrease producer surplus and increase consumer surplus.
C
An increase in demand and a decrease in supply will lead to ________ in equilibrium quantity and ________ in equilibrium price. A. an increase; an indeterminate change B. an indeterminate change; a decrease C. an indeterminate change; an increase D. a decrease; a decrease
C
An increase in supply, with no change in demand, will lead to ________ in equilibrium quantity and ________ in equilibrium price. A. a decrease; an increase B. an increase; an increase C. an increase; a decrease D. a decrease; a decrease
C
An upper limit on the quantity of a good that can be bought and sold is a: A. price ceiling. B. tariff. C. quota limit. D. price floor.
C
Ashley bought a new pair of jeans. When she walked out of the store, she thought, "I got such a great deal; I would have paid $40 more for these jeans!" This best represents the concept of: A. total surplus. B. equilibrium. C. consumer surplus. D. producer surplus
C
Economists use the term equilibrium to describe: A. when individuals are equal. B. when no individual has an incentive to change his or her behavior. C. when no individual would be better off taking a different action or when no individual has an incentive to change his or her behavior. D. when no individual would be better off taking a different action
C
Florida schools offered cash bonuses to students who scored high on the state's standardized exams. The cash bonuses are an example of which of the following basic economic principles? A. The real cost of something is what you must give up to get it. B. There are gains from trade. C. People usually take advantage of opportunities to make themselves better off. D. Resources are scarce.
C
For which of the following is the cross-price elasticity of demand most likely a large positive number? A. hockey pucks and hockey sticks B. DVDs and milk C. french fries and onion rings D. all of these, because the cross-price elasticity is always a positive number
C
If New York City had no medallion system for taxicabs, the price of a taxicab ride would: A. not change from its current level. B. increase, but only slightly. C. decrease. D. increase because of the higher safety hazards.
C
If a good is a necessity with few substitutes, then demand will tend to: A. be the same as that of a luxury good. B. be more price-elastic. C. be less price-elastic. D. have price elasticity equal to 1.
C
If the economy booms and peoples' incomes rise, then the demand curve for a normal good like new houses will ________ and the equilibrium quantity of new houses produced will ________. A. not shift; not change B. shift to the left; decrease C. shift to the right; increase D. not shift; increase
C
If the government feels that a price in the market is too high for ________, it can impose a ________. A. producers; price floor B. consumers; price floor C. consumers; price ceiling D. producers; price ceiling
C
If the government imposes a limit on sales of a good or service by issuing a license that gives the owner the right to sell a given quantity of the good, the difference between the demand and supply price is: A. the market price of the license. B. the quota rent. C. the quota rent or the market price of the license. D. the quota price.
C
If the income elasticity of demand for a good is positive, the good is said to be: : A. an inferior good. B. a positive good. C. a normal good. D. a substitute good.
C
If the price of a good increases by 15% and the quantity demanded changes by 20%, then the price elasticity of demand is equal to: A. 1. B. approximately 0.33 C. approximately 1.33. D. 0.75.
C
In the market for computers, if the demand curve is elastic and the price of a computer decreases, we would expect total revenue to ________. If the demand curve is inelastic and the price of a computer decreases, we would expect total revenue to ________. : A. decrease; decrease B. decrease; increase C. increase; decrease D. increase; increase
C
Kayla and Jada are roommates in New York City. Both Kayla and Jada recently received raises. Kayla now buys more CDs than before, but Jada buys fewer. Kayla behaves as if CDs are ________ goods, and Jada's income elasticity of demand for CDs is ________. A. inferior; positive B. inferior; negative C. normal; negative D. normal; positive
C
Marginal analysis: A. refers to decisions about whether to do a bit more or a bit less of an activity. B. helps when making a "how much" choice. C. refers to decisions about whether to do a bit more or a bit less of an activity, helps when making a "how much" choice, and involves trade-offs. D. involves trade-offs.
C
Mark and Rasheed are at the bookstore buying new calculators for the semester. Mark is willing to pay $75 and Rasheed is willing to pay $100 for a graphing calculator. The price for a calculator at the bookstore is $65. How much is Mark's individual consumer surplus? A. $35 B. $25 C. $10 D. $75
C
Price ceilings that lead to shortages will impose costs on society because they: A. will eliminate long waiting lines. B. may result in black market prices, which are lower than the market-determined price would be. C. lead to a smaller quantity offered on the market. D. help businesses instead of consumers.
C
Producers may supply an inefficiently low quality of a good if the government imposes: A. a binding price floor. B. a price control. C. a binding price ceiling. D. an excise tax.
C
Suppose the cross-price elasticity of demand for butter and margarine is equal to 0.96 but the cross price elasticity for water and lemons is -0.13. This means that butter and margarine are ________ while water and lemons are ________. A. elastic goods; complements B. complements; substitutes C. substitutes; complements D. inelastic goods; elastic goods
C
Suppose the equilibrium rent for apartments in Boston is $1,600. If the city of Boston regulates rents and each landlord charges $1,200, there will be: A. an increase in producer surplus for each landlord. B. an increase in total surplus. C. an increase in consumer surplus for Bostonians who can find apartments for $1,200. D. a surplus of new apartments in Boston
C
The demand curve for videos has shifted to the right. What could have caused it? A. a fall in the price of videos B. an increase in the price of videos C. an increase in the incomes of buyers D. an increase in the supply of videos
C
The market for lemonade is in equilibrium and the price of lemons rises. How will this affect the lemonade market? A. Demand will decrease, increasing the price and decreasing the quantity. B. Demand will decrease, decreasing the price and decreasing the quantity. C. Supply will decrease, increasing the price and decreasing the quantity. D. Supply will increase, decreasing the price and increasing the quantity.
C
The market for soybeans is initially in equilibrium. Because of mad cow disease, producers decide to replace bone meal with soybeans in cattle feed. The likely effect is that: A. the equilibrium price and quantity of soybeans will fall. B. the equilibrium quantity of soybeans will rise, but we can't determine what will happen to the equilibrium price. C. the equilibrium price and quantity of soybeans will rise. D. the equilibrium price of soybeans will rise, but we can't determine what will happen to the equilibrium quantity.
C
The price of microchips used to produce computers falls. As a result, the equilibrium price of computers ________ and the equilibrium quantity ________. A. falls; increases B. falls; decreases C. rises; decreases D. rises; increases
C
The price of notebooks is $5, and at that price consumers demand 12 notebooks. If the price rises to $7, consumers will decrease consumption to 4 notebooks. Using the midpoint formula, what is the price elasticity of demand for notebooks? A. 1/6 B. 6 C. 3 D. 1/3
C
The problem of scarcity is confronted by: A.industrialized societies only. B. preindustrialized societies only. C. all societies. D. societies governed by communist philosophies only.
C
There is one gas station in a small rural town. The owner of the station claims that he will sell the same quantity of gas no matter how high or low the price. If he is correct in this assertion, what must be true about the demand curve for gas at his station? A. It must be horizontal with a price elasticity of zero. B. It must be horizontal with a price elasticity of infinity. C. It must be vertical with a price elasticity of zero. D. It must be vertical with a price elasticity of infinity.
C
Thinking in economic terms, when Mary Sweettooth is deciding whether to eat another brownie, she: A. considers only how much additional exercise she will need to do to work off the calories associated with eating another brownie. B. considers only the price of the brownie. C. compares all of the benefits and costs of eating another brownie. D. considers whether she can do so without anyone else noticing.
C
When a tenant in a rent-controlled apartment sublets the apartment to another renter at a rent higher than the price ceiling: A. there is an increase in quantity demanded. B. there is a decrease in quantity demanded. C. we say that the transaction takes place on a black market. D. it is inefficient.
C
When actually calculated for a normal demand curve, the price elasticity of demand will be: A. always greater than 1. B. always positive. C. always negative. D. usually equal to 1.
C
When the price goes down, the quantity demanded goes up. This price elasticity measures how: A. much the equilibrium price goes up. B. responsive the price change is in relation to an income change. C. responsive the quantity change is in relation to the price change. D. much the price goes down.
C
When the price of armchairs increases, the: A. supply decreases. B. supply increases. C. quantity supplied increases. D. quantity supplied decreases.
C
Which of the following statements is correct? A. Both a change in quantity demanded and a change in demand are shifts of the demand curve, only in different directions. B. A change in demand is a movement along the demand curve, and a change in quantity demanded is a shift of the demand curve. C. A change in quantity demanded is a movement along the demand curve, and a change in demand is a shift of the demand curve. D. Both a change in quantity demanded and a change in demand are movements along the demand curve, only in different directions.
C
You manage a popular nightclub and lately revenues have been disappointing. Your bouncer suggests that raising drink prices will increase revenues, but your bartender suggests that decreasing drink prices will increase revenues. You aren't sure who is right, but you do know that: A. your bouncer thinks the demand for drinks is elastic, while your bartender thinks the demand for drinks is inelastic. B. both the bouncer and bartender think the demand for drinks is elastic. C. your bouncer thinks the demand for drinks is inelastic, while your bartender thinks the demand for drinks is elastic. D. both the bouncer and bartender think the demand for drinks is inelastic.
C
(Table: The Market for Soda) Look at the table The Market for Soda. If the government imposes a price ceiling of $0.50 per can of soda, the quantity of soda demanded will be: A. 8 cans. B. 6 cans. C. 4 cans. D. 10 cans.
D
A negative relationship between the quantity demanded and price is called the law of ________. A. marginality B. supply C. efficiency D. demand
D
A perfectly price-inelastic demand curve is: A. horizontal. B. upward sloping. C. downward sloping. D. vertical.
D
An economy is efficient if it is: A. producing a combination of goods. B. possible to produce more of all goods and services. C. possible to produce more of one good without producing less of another. D. not possible to produce more of one good without producing less of another good.
D
An economy is said to have a comparative advantage in the production of a good if it can produce that good: A. with more resources than another economy. B. with a higher opportunity cost than another economy. C. outside its production possibilities curve. D. at a lower opportunity cost than another economy.
D
An increase in supply of a good is caused by: A. expectations of future price increases. B. input prices rising. C. a fall in the price of the good. D. an increase in the number of sellers.
D
An increase in the consumer surplus in the market for milkshakes may result from: A. a decrease in the supply of milkshakes. B. an increase in the price of milkshakes. C. a decrease in the demand for milkshakes. D. an increase in the supply of milkshakes.
D
Consider gas stations where customers pay inside before they pump gasoline. If they introduce a new technology where customers pay at the pump, thus decreasing production costs, there will be: A. a shift to the right in the demand curve and higher gas prices. B. a shift to the left in the demand curve and lower gas prices. C. a shift to the left in the supply curve and higher gas prices. D. a shift to the right in the supply curve and lower gas prices.
D
Economists tend to believe that to change people's behavior you must: A. appeal to their concern for society. B. legislate the change. C. appeal to their religious values. D. change their incentives.
D
Equilibrium in the market for peanut butter is disturbed by an increase in the price of peanuts. Producer surplus in the peanut butter market: A. will not change. B. will increase. C. will decrease. D. may change, but we cannot determine the change without more information.
D
Farmers in developing countries want the United States to reduce the subsidies that it gives to American farmers because subsidized agricultural products from the United States: A. has led to an increase in the demand for agricultural products from the developing world. B. raise the world price of agricultural products. C. has led to a global shortage of agricultural products. D. lead to agricultural surpluses and lower prices for developing country farmers.
D
If Brazil gives up 3 automobiles for each ton of coffee it produces, while Peru gives up 7 automobiles for each ton of coffee it produces, then: A. Brazil has a comparative advantage in automobile production and should specialize in coffee. B. Brazil has a comparative advantage in automobile production and should specialize in automobile production. C. Brazil has a comparative advantage in coffee production and should specialize in the production of automobiles. D. Brazil has a comparative advantage in coffee production and should specialize in coffee production.
D
If a university decreases the price of tickets to football games to collect more revenue, it is assuming that the demand for tickets is: : A. unstable. B. price-inelastic. C. price unit-elastic. D. price-elastic.
D
If the price of a commodity increases, you would expect the: A. supply curve to shift to the right. B. quantity supplied to decrease. C. supply to increase. D. quantity supplied to increase.
D
If the price of gasoline rises and stays high for an extended period, we expect people to: A. buy larger and less fuel-efficient cars. B. increase the number of miles they drive. C. ride their bicycles less. D. use more public transportation.
D
If tortilla chips are a normal good, what happens to equilibrium price and quantity when there is an increase in income? A. Equilibrium price increases and equilibrium quantity increases. B. Equilibrium price decreases and equilibrium quantity decreases. C. Equilibrium price increases and equilibrium quantity decreases. D. Equilibrium price decreases and equilibrium quantity increases.
D
In the market for grass-fed beef, what would cause a price increase? A. Doctors tell patients that beef is full of saturated fat that causes heart attacks. B. There is a movement in the United States towards vegetarianism. C. The price of chicken decreases. D. The prices of grass and corn increase
D
Suppose the market demand for TV remotes is given by the equation Qd = 100 - 2P, where P is the price and Qd represents the number of TV remotes. If the market price of TV remotes is $40, then the quantity demanded would equal ________ and the value of consumer surplus will be ________. A. 2; $40 B. 40; $200 C. 100; $20 D. 20; $100
D
Microeconomics deals with: A.the working of the entire economy or large sectors of it. B. economic growth. C. gross domestic product. D. individual decision makers in the economy.
D
On a linear demand curve: A. elasticity is the same at all points on the demand curve. B. demand is elastic at low prices. C. demand is inelastic at high prices. D. demand is elastic at high prices
D
Opportunity cost is: A. the dollar payment for a product. B. about half of the monetary cost of a product. C. the benefit derived from a product. D. the value of the best alternative forgone in making any choice
D
Raclette is a popular wintertime dish in Switzerland. It is essentially melted Raclette cheese over boiled new potatoes. If the price of Raclette cheese decreased, we would expect to see: A. no effect on the demand for either of the Raclette ingredients, since this is a traditional dish and its consumption does not depend on the prices of the ingredients. B. an increase in demand for Raclette cheese and for new potatoes. C. an increase in demand for Raclette cheese. D. an increase in demand for new potatoes.
D
Scarcity in economics means: A.There must be poor people in rich countries. B.The wants of people are limited. C.Shortages exist in nearly all markets. D.We do not have sufficient resources to produce all the goods and services we want.
D
Suppose the United States removes the current sugar quotas and the market price of sugar drops. In the candy bar market, we would expect: A. the consumer surplus to decrease. B. the deadweight loss to increase. C. the consumer surplus to be unchanged. D. the consumer surplus to increase.
D
Suppose the price elasticity of demand for oranges is 1.8. If a fall frost destroys one-third of the nation's orange crop, how will that affect total revenue from oranges, all other things unchanged?Selected Answer: Incorrect [None Given] Answers: A. Not enough information is given to answer the question. B. Total revenue will remain unchanged. C. Total revenue will rise. D. Total revenue will fall.
D
Suppose the price of cereal rose by 25% and the quantity of milk sold decreased by 50%. We know that the: A. cross-price elasticity of demand for milk is 2. B. cross-price elasticity between cereal and milk is -0.5. C. price elasticity of demand for milk is 2. D. cross-price elasticity between cereal and milk is -2.
D
Technological improvements will: A. leave the production possibility frontier unchanged. B. necessarily lead to increased unemployment. C. shift the production possibility frontier inward. D. shift the production possibility frontier outward.
D
The concept of comparative advantage is based upon: A. relative labor costs. B. absolute labor productivity. C. dollar prices of labor. D. relative opportunity costs.
D
The price elasticity of demand for gasoline in the short run has been estimated to be 0.1. If a war in the Middle East causes the price of oil (from which gasoline is made) to increase, how will that affect total expenditures on gasoline in the short run, all other things equal? A. Demand will stay the same, but total expenditures will fall. B. Total expenditures will remain unchanged. C. Demand will decrease, but total expenditures will rise. D. Demand will not change much, but total expenditures will rise.
D
There are several close substitutes for Bayer aspirin but fewer substitutes for a complete medical examination. Therefore, you would expect the demand for: A. the two to be equally price-elastic. B. medical exams to be more price-elastic. C. Bayer aspirin to be more price-inelastic. D. Bayer aspirin to be more price-elastic
D
When individuals act in their own self-interest: A. equity is always achieved. B. efficiency is always achieved. C. all opportunities have been taken to make some people better off without making other people worse off. D. society may be worse off in some cases.
D
Which is not a correct statement about the undesirable side effects of a quantity control? A. Some mutually beneficial transactions do not occur because of quantity controls. B. A wedge between the demand price and supply price is created with quantity controls. C. When there are quantity controls, there are incentives for illegal activities. D. Deadweight loss does not exist when there are quantity controls.
D
Which of the following is likely to make supply more inelastic? A. The inputs necessary for production cannot readily be increased. B. The good is necessary for survival (e.g., a life-saving drug). C. The time period under consideration is very short. D. The time period under consideration is very short and the inputs necessary for production cannot readily be increased.
D
Which of the following is not a factor in determining the price elasticity of demand? A. the proportion of the budget spent on the item B. the time period involved C. the number of available substitutes D. the slope of the supply curve
D
You are analyzing a trade-off when you compare the ________and ________ of doing something. A. direct costs; total costs B. direct costs; opportunity costs C. costs; benefits D. marginal benefits; total benefits
D
Your neighbor is mowing her yard one afternoon when she stops to have some lemonade. She drinks one glass and is considering having a second glass. This is an example of: A. equilibrium analysis. B. benefit analysis. C. cost analysis. D. marginal analysi
D
f the government feels that the price in the market is too low for the ________, it can impose a ________. A. consumers; price floor B. producers; price ceiling C. consumers; price ceiling D. producers; price floor
D
f the price elasticity of demand is found to be 6, then demand is: : A. price-inelastic. B. horizontal. C. price unit-elastic. D. price-elastic.
D
We have to make choices because: A. we have unlimited income. B. resources are scarce. C. resources are infinite D. with good planning, trade-offs can be avoided.
b