ECO Practice test #1

Which is NOT a determinant of supply?

national income

Suppose that a store sells candy bars for $0.89 for one, and $1.50 for two. The marginal cost of the second candy bar is:

$0.61

Suppose that a customer's willingness to pay for a product is $79, and the seller's willingness to sell is $64. If the negotiated price is $68, how much is consumer surplus?

$11

. (Figure: Determining Surplus and Loss) In the graph, consumer surplus is _____ in equilibrium and _____ at a price of $12.

$160; $40

Suppose that a customer's willingness to pay for a product is $1,480, and the seller's willingness to sell is $1,210. If the negotiated price is $1,300, how much is consumer surplus?

$180

Jason purchased a new printer for $150 although he was willing to pay $175. The minimum price acceptable by the seller, Jasmine, was $145. The results of this transaction are a consumer surplus of:

$25 and a producer surplus of $5.

(Figure: Individual and Market Demand Curves) According to the graph, the market quantity demanded at $20 is:

10

(Figure: Market for Shoes) If the price of shoes is $40 per pair, the quantity demanded will be _____ pairs of shoes.

15

(Table) The table shows coffee and tea units produced for the United States and Japan. If Japan decides to increase production of tea from 20 units to 35 units, the opportunity cost is:

8 units of coffee

(Figure: Ships and Autos in Countries A and B) Two countries manufacture automobiles and ships. Based on the graphs:

Country A should specialize in ship building and Country B, in auto manufacturing

(Figure: Bran Muffins and Corn Flakes PPF) The graph shows the possibilities frontier for a bakery that makes corn flakes and bran muffins. Which of the following is NOT correct?

The company faces decreasing opportunity costs.

A $20 minimum on a taxi fare is an example of:

a price floor

Which of the following is a macroeconomic topic?

a study of the business cycle

Suppose the country of Alphaland can produce more cars than Omegaland can produce. An economist would conclude that Alphaland has a(n) ___________ in producing cars.

absolute advantage

Paying a salesperson more for increased sales is an example of:

an incentive

Production levels to the left of the PPF are:

attainable but inefficient

When the ______ outweigh(s) the ______ of the information, people attempt to obtain the information.

benefits; costs

(Table) Given the production possibilities schedules for the United States and Chile, which product should the United States produce if it is to produce the good for which it has a comparative advantage?

bread

If a consumer buys a set of headphones at the same time as she buys an MP3 player, these two products are MOST likely:

complementary goods

. Suppose that the price of a good is $6 and equilibrium price is $3. Compared to market equilibrium:

consumer surplus is decreased and deadweight loss is increased.

The main focus of efficiency is:

consumers getting the goods and services they want at the lowest possible resource cost.

If a price ceiling is set below the market price, it is:

effective

If a price floor is set above the market price, it is:

effective

(Figure: Determining Surplus and Loss) In the graph, if the government sets a price of $5, this is an example of an:

effective price ceiling.

An individual's valuation of a good or service is:

known as "willingness to pay."

Natural resources such as copper deposits are:

land

What would be a possible opportunity cost of you going to a doctor for a check-up?

lost income due to not being at work for those hours

A laissez-faire approach to the question of "how to produce" would be found in a:

market economy

Which of the following would NOT be a market transaction?

payment made to a disaster victim

(Figure: Bread and Honey) Which point in the graph represents unemployed resources?

point f

Which is an example of a "bad" incentive?

raising homeowners' property taxes on home improvements

When the supply of coffee decreases and the demand for coffee increases simultaneously, the price of coffee will

rise.

(Figure: Predicting Supply Shifts) The shift from supply curve 1 to supply curve 2 might be caused by an increase in:

subsidies

(Figure: Interpreting Market Equilibrium) If price were $20, then there would be a:

surplus of 2,000 units and price will fall.

A common definition of economics is that it is the study of

the allocation of scarce resources to competing wants.

All of the following fall under the category of microeconomics, EXCEPT:

the cost of living has risen due to rising housing and food prices.

(Figure: Determining Surplus) In the graph, which shape represents producer surplus?

the triangle jik

(Table) Using the data for the market for lattes in the table, at a price of $6:

there is no incentive for any participants in the market to change their behavior.

(Figure: Biscuit and Cookies PPFs) Greg and Melissa face the production possibilities frontiers shown for biscuits and cookies. Assume that Greg and Melissa trade 60 biscuits for 60 cookies after they have completely specialized in producing the good in which they have a comparative advantage. We know that Greg and Melissa are each made better off with specialization and trade than acting alone because:

they are both consuming outside their production possibilities frontier.

"Thinking at the margin" involves:

weighing the impact of one additional activity