ECON 2106 Test 1 Questions
Suppose Apple Jacks and Fruit Loops cereal are considered strong substitutes. Which of the following is most likely the cross price elasticity for these two goods? A. +3.5 B. +0.9 C. (0.0) D. -0.4 E. -4.2
A. +3.5
Suppose Wally lowers the price of his Widgets at "The World of Wally's Widgets" from $5 to $3 and each day he notices his average sales have gone from 100 to 200 per day. From this, using the mid-point method we can say that the elastic of demand for widgets is ___ (abs. value). A. 1.33 elastic B. 0.75 elastic C. 1.33 inelastic D. 0.75 inelastic
A. 1.33 elastic
Kirby and Dabo make 2 goods: Visors (hats) and Sweatshirts. On a day in the off-season, Kirby can make 10 visors or 25 sweatshirts while Dabo can make 12 visors or 36 sweatshirts (both can make some combination of these goods given a constant rate of trade off in production). With this information, answer the following questions. Suppose Dabo and Kirby need to produce 12 visors in a day. If they work together, what is the most efficient method and get the most sweatshirts too? A. Kirby produces 10 visors and Dabo produces 2 visors and 30 sweatshirts. B. Kirby produces 8 visors and 10 sweatshirts and Dabo produces 4 visors and 20 sweatshirts. C. Dabo produces 12 visors and Kirby produces 25 sweatshirts. D. Dabo produces 36 sweatshirts and Kirby produces 12 sweatshirts. E. Dabo produces 8 visors and 10 sweatshirts and Kirby produces 4 visors and 20 sweatshirts.
A. Kirby produces 10 visors and Dabo produces 2 visors and 30 sweatshirts
Ron and Leslie work for the local Athens Park and Recreation Dept. To celebrate a new park in Athens they are having a "Steak and Pancake" cookout with Ron and Leslie cooking. They can cook either steak, pancakes or some combination at a constant rate. The following chart shows the total possible for each can produce in an hour. Pancakes Steaks Ron 100 10 Leslie 60 3 Suppose Athens City Councilman Jam requested 100 pancakes an hour and he controls the Parks and Rec. budget. What is the most efficient method to produce the 100 Pancakes per hour? A. Leslie produces 60 Pancakes, Ron produces 40 Pancakes and 6 Steaks B. Leslie produces 40 Pancakes and 1 Steak, Ron produces 60 Pancakes and 6 Steaks C. Leslie produces 20 Pancakes and 2 Steaks, Ron produces 80 Pancakes and 8 Steaks D. Leslie produces 0 Pancakes and 3 Steaks, Ron produces 100 Pancakes and 1 Steak
A. Leslie produces 60 pancakes, Ron produces 40 pancakes and 6 steaks
A decrease in input costs to firms in a market will result in A. a decrease in equilibrium price and an increase in equilibrium quantity. B. a decrease in equilibrium price and a decrease in equilibrium quantity. C. an increase in equilibrium price and no change in equilibrium quantity. D. an increase in equilibrium price and an increase in equilibrium quantity.
A. a decrease in equilibrium price and an increase in equilibrium quantity
Suppose a health insurance company is willing to offer a rebate to customers that get a yearly check-up. This is an example of a ___ A. a positive incentive. B. a comparative advantage. C. a negative incentive. D. scarcity. E. an opportunity cost.
A. a positive incentive
If a study by medical researchers found that brown sugar caused weight loss while white sugar caused weight gain we likely would see A. an increase in demand for brown sugar and a decrease in demand for white sugar. B. an increase in demand for brown sugar, but no change in the demand for white sugar. C. a decrease in the demand for white sugar, but no change in the demand for brown sugar. D. no change in either demand because weight loss is not a nonprice determinant of demand.
A. an increase in demand for brown sugar and a decrease in demand for white sugar
The expression that means "other things being equal" is ___. A. ceteris paribus. B. there is no accounting for tastes C. the post hoc fallacy. D. normative economics. E. the fallacy of composition.
A. ceteris paribus
When small changes in price lead to infinite changes in quantity demanded, demand is perfectly A. elastic and the demand curve will be horizontal. B. inelastic and the demand curve will be horizontal. C. elastic and the demand curve will be vertical. D. inelastic and the demand curve will be vertical.
A. elastic and the demand curve will be horizontal
Warrensburg is a small college town in Missouri. At the end of August / early September each year college begins, the market demand for fast food in Warrensburg A. increases. B. decreases. C. remains constant, but we observe a movement downward and to the right along the demand curve. D. remains constant, but we observe a movement upward and to the right along the supply curve.
A. increases
Which of the following is considered a direct effect of lowering the mileage fee for a "Peach Pass" (Georgia's toll road automated system) around Atlanta. A. More drivers sign up and use the Peach Pass lane. B. More drivers increase their driving during "rush hour" periods. C. The Peach Pass line has more accidents over the course of a month. D. Both A and B are considered direct effects. E. A, B and C are considered direct effects.
A. more drivers sign up and use the Peach Pass lane
Suppose you can (i) go to the football game, (ii) go to a party, or (iii) sleep. Suppose you choose to go to the party, but if the party were cancelled, you would sleep. Then the cost of going to the party is A. sleep, because this is the highest-valued foregone alternative to the party B. both the football game and sleep, because you give up both to go to the party C. nothing, unless there is a cover charge that must be paid at the door D. the football game, because this is the least valuable item sacrificed, and people try to minimize costs E. it could be either the football game or sleep, depending on the price of tickets to the game
A. sleep, because this is the highest-valued foregone alternative to the party
Suppose on campus at UGA there is a severe rainstorm. Some students consider parking illegally closer to the building where their classes are. Using MB/MC analysis we would say ___. A. The MB function has shifted right and more students park in "faculty parking". B. The MB function has shifted left and more students park in "faculty parking". C. The MC function has shifted right and less students park in "faculty parking". D. The MC function has shifted left and more students park in "faculty parking". E. The MB function has shifted left and less students park in "faculty parking".
A. the MB function has shifted right and more students park in "faculty parking"
If a country allows trade and, for a certain good, the domestic price without trade is lower than the world price, A. the country will be an exporter of the good. B. the country will be an importer of the good. C. the country will be neither an exporter nor an importer of the good. D. Additional information is needed about demand to determine whether the country will be an exporter of the good, an importer of the good, or neither.
A. the country will be an exporter of the good
Taxes almost always cause producer prices to decrease. How much they decrease depends on ___. A. the elasticities of supply and demand. B. the amount of the tax. C. who is legally obligated to pay the tax. D. who pays the tax out of pocket. E. how often the government collects the tax.
A. the elasticities of supply and demand
In the market for hotdogs, the price of mustard (complement) falls and at the same time the government requires new regulation to verify which animals the meat actually comes from which increases production costs. With this information, we know for hotdogs ___. A. The market price will increase, but market quantity is uncertain. B. The market price will decrease, but market quantity is uncertain. C. The market quantity will increase, but the market price is uncertain. D. The market quantity will decrease, but the market price is uncertain.
A. the market price will increase, but market quantity is uncertain
In a given market, the elasticity of demand is -3.0 and elasticity of supply is +2.5. Now suppose a tax is imposed on consumers. Which of the following is true? A. The tax incidence will fall more on firms. B. The tax incidence will fall more on consumers. C. Demand is relatively more inelastic than Supply in this market D. A and C are correct, B is wrong. E. B and C are correct, A is wrong.
A. the tax incidence will fall more on firms
Suppose Bob is selling his "Lord of the Rings" action figures. He will take $100. Roy wants to buy the action figures and will pay $200. They settle on a price of $140. Which of the following is true? A. The trade created $60 in consumer surplus. B. The trade created $100 in consumer surplus. C. The trade created $140 in producer surplus. D. The trade created $200 in producer surplus. E. The trade created a total increase in net welfare of $300.
A. the trade created $60 in consumer surplus
What are correct determinants of the price elasticity of demand? A. Time, whether the good is a necessity or a luxury good, the share of the budget spent on the good, and the existence of substitutes B. The existence of substitutes, whether the good is a necessity or a luxury good, the how fast a producer can bring their output to market, time C. How fast a producer can bring their output to market, whether the good is a necessity or a luxury good, the availability of substitutes, the possibility of price increasing D. None of the above
A. time, whether the good is a necessity or a luxury good, the share of the budget spent on the good, and the existence of substitutes
For fun, Philadelphia Eagles fans love throwing batteries at the opposing teams, but right now there is a surplus of batteries on the shelves. What can we infer about this? A. To reach an equilibrium the quantity demanded will increase as the market price falls. B. At the current price the quantity supplied is less than the quantity demanded. C. The supply of batteries will need to shift right to reduce the surplus. D. To reach an equilibrium the market price will rise. E. The surplus will disappear as the demand for batteries shifts left.
A. to reach and equilibrium the quantity demanded will increase as the market price falls
The presence of scarcity means that no choices come without ___ A. trade-offs. B. consumption. C. regret. D. shortages. E. incentives.
A. trade-offs
If the price of a 24-pack of Pepsi falls from $12 to $4 and the quantity purchased at Dominick's increases from 1,000 to 3,000 per year, then demand is A. unit elastic. B. inelastic. C. elastic. D. perfectly elastic. E. perfectly inelastic.
A. unit elastic
Which of the following is likely to be the price elasticity of demand for food? A. +1.1 B. -0.25 C. +4.2 D. -3.2
B. -0.25
Suppose Walmart sells 155,000 one week and then sells 165,000 the next week after dropping the price 10%. Given this information answer the following question. Determine the price elasticity of demand. A. 0.16 B. 0.625 C. 1.0 D. 1.6 E. 6.25
B. 0.625
Refer to Figure, if the economy moves from point A to point D, the opportunity cost is A. 10 toasters. B. 20 toasters. C. 30 toasters. D. 20 toothbrushes. E. 30 toothbrushes.
B. 20 toasters
For society, a good is not scarce if A. at least one individual in society can obtain all he or she wants of the good. B. all members of society can have all they want of the good. C. firms are producing the good at full capacity. D. those who have enough income can buy all they want of the good.
B. all members of society can have all they want of the good
If lamquats fruits are inferior goods, which of the following would be expected to increase the demand for lamquats? A. A reduction in the price of lamquats B. An increase in the price of a lamquat substitute C. An increase in the incomes of consumers D. Both A and B E. Both B and C
B. an increase i the price of a lamquat substitute
A person has a comparative advantage in an activity whenever she A. has an absolute advantage in the activity. B. can perform the activity at a lower opportunity cost than can another person. C. can do the activity in less time than anyone else. D. can do everything better than anyone else.
B. can perform the activity at a lower opportunity cost than can another person
Any point on a country's production possibilities frontier represents a combination of two goods that an economy A. will never be able to produce. B. can produce using all available resources and technology. C. can produce using some portion, but not all, of its resources and technology. D. may be able to produce in the future with more resources and/or superior technology.
B. can produce using all available resources and technology
Suppose OPEC (oil producing-exporting countries) restrict supply causing the world market price to increase. As a result, these countries earn higher revenue from selling oil. This would suggest ____. A. demand for oil is elastic. B. demand for oil is inelastic. C. the supply of oil is elastic. D. the supply of oil is inelastic.
B. demand for oil is inelastic
Suppose the cross-price elasticity of demand between hot dogs and mustard is -2.00. This implies that a 20 percent increase in the price of hot dogs will cause the quantity of mustard purchased to A. fall by 200 percent. B. fall by 40 percent. C. rise by 200 percent. D. rise by 40 percent.
B. fall by 40 percent
The supply function in the market for portal generators increases. Which of the following would NOT cause this? (hint: two answers) A. New companies enter the market producing generators. B. Hurricane Irma is forecast to make landfall in Florida in a week and consumers rush to buy generators. C. There is an improvement in technology in the production of small motors for generators. D. Tailgating at college football games increases across the country requiring electricity for their TVs.
B. hurricane Irma is forecast to make landfall in Florida in a week and consumers rush to buy generators D. tailgating at college football games increase across the country requiring electricity for their TVs
Which of the following would shift the market supply of "Mac-n-Cheese" to the right? A. The government imposes a new tax on all products with cheese. B. New machinery that shapes and cuts more macaroni noodles at a faster pace for the same production costs is introduced. C. The price of "Mac-n-Cheese" increases as the consumers shift to a new fad diet the "pasta diet". D. Workers at the "Mac-n-Cheese" factories agree to a new labor contract with higher wages. E. Both A and D are correct.
B. new machinery that shapes and cutes more macaroni noodles at a faster pace for the same production costs is introduced
If Francis experiences a decrease in his income, we would expect that, as a result, Francis's demand for A. each good he purchases will remain unchanged. B. normal goods will decrease. C. luxury goods will increase. D. inferior goods will decrease. E. None of these are correct.
B. normal goods will decrease
If scooters are an inferior good and the price of scooters rises, all else constant, the ___. A. demand for scooters will rise B. quantity demanded of scooters will fall C. demand for scooters will fall D. quantity demanded of scooters will rise E. supply of scooters will fall
B. quantity demanded of scooters will fall
The First Law of Supply tells us that: A. increasing the price of a good will increase the supply for that good B. the lower the price of a good the lower will be the quantity of it supplied C. the lower the price of a good, the lower will be the supply for it D. the higher the price of a good, the lower will be the quantity supplied E. none of the above
B. the lower the price of a good the lower will be the quantity of it supplied
When Delta Airlines offers $3000 for one passenger to give up a seat on a flight to South Bend, IN and no one volunteers until they offer more, we might say ___. A. The trade-off of the accounting cost is too large. B. The opportunity cost for those passengers that remained was greater than $3000. C. $5000 is the appropriate incentive to encourage a trade-off. D. The person that took the offer had a comparative advantage in trading money for a valuable flight. E. If Delta had offered just less than the opportunity cost of the flight then more passengers would have likely volunteered.
B. the opportunity cost for those passengers that remained was greater the $3000
Which of the following is a microeconomic topic? A. the reasons for a decline in average prices in Georgia B. the reasons why Kirby buys fewer sore throat cough drops C. the cause of why total employment in the state of Georgia may decrease D. the effect of the Georgia government budget surplus on inflation E. the GDP of the state of Georgia in 2016.
B. the reasons why Kirby buys fewer sore throat cough drops
The city of Athens imposes a tax on Red Bull of $1.00 per can. Suppose in the relevant elasticity range the εD is (-2.5) while the ηS is (+2.0). With this information we know ___. A. The consumers in Athens will pay $0.50 or more of the tax. B. The stores selling in Athens will pay $0.50 or more of the tax. C. The deadweight loss will be smaller as compared to the same market where εD =(-0.8) and ηS = (+1.0). D. Both A and C are correct. E. Both B and C are correct.
B. the stores selling Athens will pay $0.50 or more of the tax
Which of the following would be considered a positive economic statement? A. Georgia will be better off by providing free shelters to those evacuating Florida. B. The unemployment rate will decrease in the month of Sept. after the rebuilding begins in Florida. C. Federal aid to Florida of $2 billion is not enough to improve the economy after Irma. D. Houston has dealt with the effects of a hurricane in the most equitable way and the state of Texas should be the new example of emergency planning.
B. the unemployment rate will decrease in the month of Sept. after the rebuilding begins in Florida
Per the article and class discussion, Mylan the drug company that produces the "EpiPen" increased ____. A. total revenue by lowering the market price because elasticity of demand was elastic B. total revenue by raising the market price because elasticity of demand was inelastic C. total revenue by lowering the market price because elasticity of demand was inelastic D. total revenue by raising the market price because elasticity of demand was elastic
B. total revenue by raising the market price because elasticity of demand was inelastic
With a production possibilities curve of computers and coffee, if we can produce more computers and the same amount of coffee then currently, _____. A. We are producing outside the PPC B. We are producing inside the PPC C. If we increase computers we must produce less coffee D. If we increase coffee we must produce less computers E. We are producing on the PPC
B. we are producing inside the PPC
Suppose Larry, Moe and Curly are bidding in an auction for a mint-condition video of Charlie Chaplin's first movie. Each has in mind a maximum amount that he will bid. This maximum is called A. a resistance price. B. willingness to pay. C. consumer surplus. D. producer surplus.
B. willingness to pay
Suppose after a friend gives you a free ticket ($70 face value) and you promise not to resell the ticket, you choose to go see "Hamilton" the play one evening instead of working one of your part-time jobs (Jittery Joe's barista, $7.25 and Biology lab asst., $8.50). You could say the opportunity cost of the play for you is ___. A. $1.25 B. $7.25 C. $8.50 D. $15.75 E. $70
C. $8.50
Assume that Pepsi is a normal good and that Coke and Pepsi are substitutes. You observe that people consumed less Pepsi in 2011 than in 2010. Which of the following could have been responsible for this observation? A. a rise in the price of Coke, accompanied by a rise in consumers' incomes B. a rise in consumers' incomes, accompanied by no change in the price of Coke C. a decline in consumers' incomes, accompanied by a decrease in the price of Coke. D. a decline in the price of high fructose corn syrup, accompanied by no change in consumers' incomes E. Either C or D could have caused this observation
C. a decline in consumers' incomes, accompanied by a decrease in the price of Coke
Which of the following would result in an increase in the quantity demanded for coffee? A. Muffins (complement) are cheaper. B. New health report says, "Coffee lowers heart attacks chance". C. A decrease in the price of coffee occurs over the month of September. D. Consumer income increases assuming coffee is a normal good. E. All the above are correct.
C. a decrease in the price of coffee occurs over the month of September
Suppose Peter Dinklage and Morgan Freeman convince me and many others to buy more Doritos and Mountain Dew. In both markets we can expect ___. A. A shift to the left in the demand for both goods. B. A shortage of goods at the new equilibrium in both markets. C. An increase in the quantity supplied for both goods. D. A shift to the right of the supply of both Doritos and Mountain Dew. E. An increase in the quantity demanded for both goods.
C. an increase in the quantity supplied for both goods
An incentive for certain behavior ___. A. is the same as a normative economic decision. B. could be a reward but could not be a penalty. C. could be either a reward or a penalty. D. could be a penalty but could not be a reward. E. requires monetary loss for the trade-off to apply.
C. could be either a reward or a penalty
At the local "fried fish shack" restaurant, they noticed when they increased the price of a sandwich from $4 to $5.50 they sold the same number of fish sandwiches (300) per week. In this price range we can conclude that ___. A. demand for sandwiches is perfectly elastic B. demand for sandwiches is elastic C. demand for sandwiches is perfectly inelastic D. demand for sandwiches is unitary elastic E. supply for sandwiches is perfectly elastic
C. demand for sandwiches is perfectly inelastic
According to the principle of diminishing marginal value A. less of a good is more valuable than more of it, because value diminishes with use B. maximum satisfaction is reached when marginal and total use value are equal C. even though total use value rises as more of a good is consumed, marginal use value declines D. as the rate of consumption of a good rise, marginal and total use value both fall E. as consumption rises, total use value falls, but marginal use value rises, generally up to some ideal maximum
C. even though total use value rises as more of a good is consumed, marginal use value declines
The world price of a simple electronic calculator is $5.00. Before Singapore allowed trade in calculators, the price of a calculator there was $4.00. Once Singapore began allowing trade in calculators with other countries, Singapore began A. importing calculators and the price of a calculator in Singapore increased to $5.00. B. importing calculators and the price of a calculator in Singapore remained at $4.00. C. exporting calculators and the price of a calculator in Singapore increased to $5.00. D. exporting calculators and the price of a calculator in Singapore remained at $4.00.
C. exporting calculators and the price of a calculator in Singapore increased to $5.00
Kirby and Dabo make 2 goods: Visors (hats) and Sweatshirts. On a day in the off-season, Kirby can make 10 visors or 25 sweatshirts while Dabo can make 12 visors or 36 sweatshirts (both can make some combination of these goods given a constant rate of trade off in production). With this information, answer the following questions. Which of the following statements is correct? A. For Kirby, the opportunity cost of 1 visor is 0.4 sweatshirts. B. For Kirby, the opportunity cost of 1 sweatshirt is 2.5 visors. C. For Dabo, the opportunity cost of 1 visor is 3 sweatshirts. D. For Dabo, the opportunity cost of 1 sweatshirt is 2.5 visors.
C. for Dabo, the opportunity cost of 1 visor is 3 sweatshirts
Ron and Leslie work for the local Athens Park and Recreation Dept. To celebrate a new park in Athens they are having a "Steak and Pancake" cookout with Ron and Leslie cooking. They can cook either steak, pancakes or some combination at a constant rate. The following chart shows the total possible for each can produce in an hour. Pancakes Steaks Ron 100 10 Leslie 60 3 Which of the following is TRUE about opportunity costs? A. For Ron, 1 Steak = 20 Pancakes B. For Ron, 1 Steak = 15 Pancakes C. For Leslie, 1 Pancake = 0.05 Steaks D. For Leslie, 1 Pancake = 0.3 Steak
C. for Leslie, 1 pancake = 0.05 steaks
Which of the following about taxes is TRUE? A. The entire loss of producer and consumer surplus from a tax is a deadweight loss. B. The tax incidence always falls on the consumers if they are more price sensitive than firms. C. In most cases, the deadweight loss increases with the size of the tax. D. Both B and C are correct, A is wrong. E. A, B and C are all correct.
C. in most cases, the deadweight loss increases with the size of the tax
A worker in Bangladesh can earn $1 per day making cotton cloth on a hand loom. A worker in the United States can earn $100 per day making cotton cloth with a mechanical loom. What accounts for the difference in wages? A. U.S. textile workers belong to a union. B. There is little demand for cotton cloth in Bangladesh and great demand in the U.S. C. Labor is more productive making cotton cloth with a mechanical loom than with a hand loom. D. Bangladesh has a low-wage policy to make its textile industry more competitive in world markets.
C. labor is more productive making cotton cloth with a mechanical loom than with a hand loom
The demand for the Ford Focus (car) is ___. A. likely inelastic and less elastic than the demand for automobiles. B. likely elastic but less elastic than the demand for automobiles. C. likely elastic and more elastic than the demand for automobiles. D. likely inelastic but more elastic than the demand for automobiles.
C. likely elastic and more elastic than the demand for automobiles
With basic marginal analysis, we know at more of a good is consumed/used A. Marginal Benefit increases while Total Benefit also increases. B. Marginal Cost decreases while Total Cost also increases. C. Marginal Cost increases while Total Cost also increases. D. Both Option A and B are correct.
C. marginal cost increases while total cost also increases
If the quantity supplied is the same regardless of price, then supply is: A. elastic. B. perfectly elastic. C. perfectly inelastic. D. unit elastic. E. inelastic.
C. perfectly inelastic
Karen has been struggling in her Economics course this semester. Her mom told her that if she studies hard and passes her course with a B or better, she will buy her a new laptop for Christmas. What type of incentive is Karen's mom using? A. Positive and indirect B. Negative and direct C. Positive and direct D. Negative and indirect
C. positive and direct
If the price of "widgets" falls the demand for a complementary good will ___. A. Shift to the left. B. Remain constant C. Shift to the right. D. Result in an increase in supply.
C. shift to the right
In a market where the quantity demanded is greater than the quantity supplied a _____ will occur and there will be ____ PRESSURE on the market price. A. Shortage; downward B. Surplus; downward C. Shortage; upward D. Surplus; upward
C. shortage; upward
Russell spends an hour studying instead of playing tennis. The opportunity cost to him of studying is A. the improvement in his grades from studying for the hour. B. the improvement in his grades from studying minus the enjoyment of playing tennis. C. the enjoyment and exercise he would have received had he played tennis. D. Zero. Since Russell chose to study rather than to play tennis, the value of studying must have been greater than the value of playing tennis.
C. the enjoyment and exercise he would have received had he played tennis
If demand is price elastic and the price is increased, which of the following occurs? A. the quantity sold increases B. the total revenue of the firms selling the product is unchanged C. the total revenue of the firms selling the product decreases D. the total revenue of the firms selling the product increases because more units are bought
C. the total revenue of the firms selling the product decreases
Suppose Walmart sells 155,000 one week and then sells 165,000 the next week after dropping the price 10%. Given this information answer the following question. From your answer last answer, what can expect to happen to revenue? A. The total revenue will fall because demand is elastic. B. The total revenue will rise because demand is inelastic. C. The total revenue will fall because demand is inelastic. D. The total revenue will rise because demand is elastic.
C. the total revenue will fall because demand is inelastic
Suppose Kris finally goes to see Star Wars: The Last Jedi. He would have paid $12 to see the movie and the movie theater would have let him in if used a UGA-employee "discount" at $5 (he didn't know about it). Instead he paid the regular ticket price of $8. With this information we would say the consumer surplus here is ___. A. $10 B. $8 C. $7 D. $4 E. $3
D. $4
Ron and Leslie work for the local Athens Park and Recreation Dept. To celebrate a new park in Athens they are having a "Steak and Pancake" cookout with Ron and Leslie cooking. They can cook either steak, pancakes or some combination at a constant rate. The following chart shows the total possible for each can produce in an hour. Pancakes Steaks Ron 100 10 Leslie 60 3 Which of the following statements is FALSE? A. Ron has an absolute advantage in producing Pancakes. B. Ron has an absolute advantage in producing Pancakes. C. Ron can produce 50 Pancakes and 5 Steaks in an hour. D. Leslie has a comparative advantage in Steaks. E. Leslie can produce 60 Pancakes in an hour.
D. Leslie has a comparative advantage in Steaks
Suppose we live in a world of Bagels and Cream Cheese on our economy's PPC. Now suppose there is an increase in the technology of producing Bagels. Which of the following is possible on our new PPC compared to the original PPC? A. We could produce more Bagels only. B. We could produce more Bagels and Cream Cheese. C. We could produce more Cream Cheese only. D. Both A and B are possible, C is not. E. A, B and C are all possible.
D. both A and B are possible, C is not
Which of the following would shift the demand function for Waffle Fries to the left? A. Chicken sandwiches (complement) fall in price. B. Potatoes (input) increase in price. C. Tater Tots (substitute) increase in price D. Consumers income falls, Waffle Fries are normal goods. E. Deep Fryers (to cook fries) fall in price.
D. consumers income falls, Waffle Fires are normal goods
Which of the following is true about a deadweight loss (DWL) in a market? A. A DWL only occurs when a tax is imposed on consumers. B. The consumer surplus that is taken in tax revenue is part of the DWL. C. A DWL is also described as the "tax incidence". D. In most cases as the tax increases the DWL increases.
D. in most cases as the tax increases the DWL increases
Suppose the income elasticity of demand for basketballs is 1.20. A 3 percent increase in the price of basketballs will result in A. a 3.6 percent decrease in the quantity of basketballs demanded. B. a 3.6 percent increase in the quantity of basketballs demanded. C. a 4 percent decrease in the number of basketballs demanded. D. none of the above is correct
D. none of the above is correct
Normative analysis refers to what: A. is B. was C. will be D. ought to be
D. ought to be
If the demand for coffee falls and the supply also falls A. price will rise and quantity will fall B. price will fall and quantity will fall C. price will fall and the effect on quantity is indeterminate D. quantity will fall and the effect on price is indeterminate
D. quantity will fall and the effect on price is indeterminate
Demand is perfectly inelastic when A. the market for the good or service has many substitutes. B. the market for the good or service has only a few substitutes. C. shifts in the supply curve results in no change in the market price. D. shifts of the supply curve results in no change in quantity demanded. E. shifts of the supply curve results in no change in the total revenue.
D. shifts of the supply curve results in no change in quantity demanded
Which of the following would result in an increase in the equilibrium price and quantity in the U.S. market for bacon? A. Consumer income decreases if bacon is a normal good. B. The price to feed pigs falls. C. The government requires increased testing doubling farm "safety costs". D. The price of skirt steak (substitute) increases. E. The U.S. gov't allows more imports of bacon from Canada.
D. the price of skirt steak (substitute) increases
If there is a surplus of "Big Badonkadonk" designer underwear we should expect A. the demand for the underwear to rise B. the price of the underwear to rise C. the demand for underwear to fall D. the price of the underwear to fall E. None of the above
D. the price of underwear to fall
A nation will engage in voluntary trade if ___. A. there are no domestic costs associated with trade. B. it allows a trade partner to specialize. C. it lacks a comparative advantage in the production of every good. D. the terms are mutually beneficial for both parties. E. the trade is approved by the United Nations.
D. the terms are mutually beneficial for both parties
Suppose "fidget spinners" are priced at $2, but they are immediately sold out with every new shipment. This implies what about the market? A. There is an excess production of fidget spinners and the market price will fall to reach equilibrium. B. There will be an eventual rightward shift in the demand for fidget spinners. C. There will be an eventual rightward shift in the supply of fidget spinners. D. There is excess demand for fidget spinners, and the price will rise for an equilibrium to be reached. E. There is excess demand for fidget spinners, and the price will fall for an equilibrium to be reached.
D. there is excess demand for fidget spinners, and the price will rise for an equilibrium to be reached
If the price and quantity for an inferior good, Good X, is $8 and 6 units at the original equilibrium, what is one possibility for the new equilibrium of Good X if we see income increase and all other factors stay constant? A. $10 and 4 units B. $6 and 8 units C. $10 and 8 units D. $10 and 2 units E. $6 and 4 units
E. $6 and 4 units
Refer to Figure in the last flashcard, the opportunity cost of obtaining 10 additional toasters by moving from point B to point A is A. 10 toothbrushes. B. 20 toothbrushes. C. 10 toasters. D. 30 toasters. E. 0, since the economy has the additional resources to produce 10 additional toasters.
E. 0, since the economy has the additional resources to produce 10 additional toasters
Which situation represents economic contraction? A. upward movement along the PPC B. downward movement along the PPC C. straightening of the curve of the PPC D. an outward shift of the PPC E. an inward shift of the PPC
E. an inward shift of the PPC
Which of the following includes Kris in the market demand for the good (it's good to come to class regularly). A. Cigarettes B. Grape jelly C. Owning a cat D. Skinny jeans E. Chick-fil-a
E. chick-fil-a
The cost to society created by distortions in the market as a result of a tax is also known as ___. A. social distortion. B. fiduciary imbalance. C. fiscal externality. D. budget deficit. E. deadweight loss.
E. deadweight loss
Which of the following is NOT a type of incentive? A. positive B. indirect C. negative D. direct E. inferior
E. inferior
As discussed in class, which markets are seeing a decrease in demand because millennials don't use the products (services)? A. Smartphones B. Amazon "e-books" C. Beard trimmers D. T-shirts with "ironic slogans" E. Napkins
E. napkins
The current price of neckties is $30 and the equilibrium price of neckties is $25. As a result, A. the quantity supplied of neckties exceeds the quantity demanded of neckties at the $30 price. B. the equilibrium quantity of neckties exceeds the quantity demanded at the $30 price. C. there is a shortage of neckties at the $30 price. D. all of the above are correct. E. Only A and B are correct; C is wrong
E. only A and B are correct; C is wrong
From an economic perspective, how safe should airplanes be? A. Safe enough so that no one dies in plane crashes. B. Any level of safety is efficient as long as the total benefits of safety exceed total costs of safety C. The difference between the marginal benefits of safety and the marginal costs of safety should be maximized D. We should expand safety until the marginal benefits are driven to zero, regardless of the costs E. The efficient level of safety occurs where the marginal benefits of safety are equal to the marginal costs.
E. the efficient level of safety occurs where the marginal benefits of safety are equal to the marginal costs
Which of the following is considered a positive statement related to the new tax law changes? A. The President lowered taxes to make American great again. B. The President lowered taxes to benefit CEOs of large corporations. C. The changes to tax rates move us closer to a fair marginal tax rate system. D. The upper income tax brackets should have increased to improve the governments effectiveness in spending plans. E. The lower tax rates will result in an increase in after tax take-home pay for workers.
E. the lower tax rates will result in an increase in after tax take-home pay for workers
Suppose a country is producing at an efficient output on its PPC (2 good world: toothbrushes and onion rings). Which of the following is true? A. It can increase production of both goods. B. It can increase the production of toothbrushes while maintaining constant production of onion rings. C. Anywhere inside the PPC is considered an efficient output. D. The "end point" production of only onion rings is not considered "optimal". E. The production of more onion rings requires fewer resources to produce toothbrushes.
E. the production of more onion rings requires fewer resources to produce toothbrushes
Which statement is correct related to the syllabus to this class? A. The class material is separated into 5 parts with corresponding exams. B. My office is on the top floor of the MLC (same as our classroom) building. C. The lowest 2 exams are dropped and replaced by the final. D. A portion of your total grade is based on 3-page paper turned into my TA by Fall Break. E. You need a 95 average before you can consider exempting the final exam.
E. you need a 95 average before you can consider exempting the final exam
Which of the following would result in a decrease in the equilibrium price and quantity in the U.S. market for "fabric softener"? A. Detergent companies create new (cheaper) methods to produce fabric softener. B. Consumer income increases if fabric softener is a normal good. C. The price of detergent (complement) falls. D. The government allows fabric softener to be sold in plastic bags lower container costs. E. Millennials decide they don't need fabric softener.
Millennials decide they don't need fabric softener
