econ exam 1
If you can buy 9 DVDs for $126 or you could buy 10 DVDs for $130, then the marginal cost of the tenth DVD is: A $4. B $13. C $14. D $130.
A $4.
Image of S/D curve, equilibrium at .45 cents An example of an effective price ceiling would be government setting the price of pencils at A. .4 B. .45 C. .5 D .55
A .4
figure shows a demand curve shifting to the left. Which of the following would be most likely to cause the demand for Dr. Pepper to shift from D0 to D1 A a decrease in income, assuming that Dr. Pepper is a normal good B a decrease in the price of Dr. Pepper C a reduction in the price of sugar used to make Dr. Pepper D an increase in the price of 7-UP, assuming 7-UP is a substitute for Dr. Pepper
A a decrease in income, assuming that Dr. Pepper is a normal good
Which of the following lowers the equilibrium price of a canoe? A an increase in the supply of canoes B an increase in the demand for canoes C an increase in the quantity of canoes supplied D a decrease in the supply of canoes E Both answers A and B are correct.
A an increase in the supply of canoes
A change in income, preferences, or prices of other goods or services leads to a ________ that causes a ________. A change in demand; shift of the demand curve B change in quantity demanded; shift of the demand curve C change in quantity demanded; movement along the demand curve D change in demand; movement along the demand curve
A change in demand; shift of the demand curve
In college you practically existed on instant noodles, but now you earn $95,000 a year. You never want to see instant noodles again. We can safely conclude that you consider instant noodles to be a(n) A inferior good. B luxury. C complementary good. D normal good.
A inferior good.
Issuing coupons, waiting in line and catering to favored customers are all methods of A nonprice rationing. B income distribution. C unbiased favoritism. D exploiting wealth.
A nonprice rationing.
The difference between current market price and full costs of production for the firm is known as A producer surplus. B nonprice surplus. C consumer surplus. D market surplus.
A producer surplus.
As an individual consumes more of a product within a given period of time, it is likely that each additional unit consumed will yield A successively less satisfaction. B less satisfaction for a while and then start to add more satisfaction. C the same amount of satisfaction. D successively more satisfaction.
A successively less satisfaction.
An example of an effective price ceiling would be the government setting the price of wheat at ___________ per bushel when the market price is at 4.25 per bushel. A. 3.75 B. 4.25 C 7.75 D. 12.00
A. 3.75
In the short run, it is necessary to nonprice ration a good whenever ____ exists A. excess demand B. a surplus C. excess supply D. Market equilibrium
A. excess demand
If the government imposes a maximum price that is above the equilibrium price A. this maximum price will have no economic impact B. the available supply will have to be rationed with a nonprice rationing mechanism C. quantity demanded will be less than the quantity supplied D. demand will be greater than supply
A. this maximum price will have no economic impact
Which of the following is a normative question? A What will happen to gasoline consumption if the federal tax on gasoline is eliminated? B To reduce the regressive nature of the gasoline excise tax, should the portion of the gasoline excise tax paid by high-income individuals be increased? C Why do gasoline prices increase between Memorial Day and Labor Day? D How will oil exploration be affected if the government subsidizes oil producers?
B To reduce the regressive nature of the gasoline excise tax, should the portion of the gasoline excise tax paid by high-income individuals be increased?
Inflation and unemployment A are a focus of positive economics. B are a focus of macroeconomics. C are a focus of microeconomics. D are the focus of normative economics.
B are a focus of macroeconomics.
A surplus of cardboard boxes means that A at the current price of a cardboard box, the quantity demanded equals the quantity supplied and the price will fall to restore the equilibrium. B at the current price of a cardboard box, the quantity demanded is less than the quantity supplied. C the current price of a cardboard box is less than the equilibrium price. D at the current price of a cardboard box, the quantity demanded exceeds the quantity supplied. E More information is needed to determine if the price of cardboard boxes is higher than, lower than, or equal to the equilibrium price.
B at the current price of a cardboard box, the quantity demanded is less than the quantity supplied.
An effective price ceiling must be set A above the equilibrium price. B below the equilibrium price. C at the equilibrium price. D either at or above the equilibrium price.
B below the equilibrium price.
In response to news reports that taking aspirin daily can reduce an individual's risk of a heart attack, there will most likely be a(n) A increase in the supply of aspirin. B increase in the demand for aspirin. C decrease in the supply of aspirin. D increase in the quantity demanded of aspirin.
B increase in the demand for aspirin.
A government-imposed maximum price will have no economic impact if A there is a fixed supply of the good. ! B it is above the equilibrium price. C it is at or below the equilibrium price. D it is below the equilibrium price.
B it is above the equilibrium price.
The branch of economics that examines the functioning of individual industries and the behavior of individual decision-making units is A normative economics. B microeconomics. C macroeconomics. D positive economics.
B microeconomics.
If the demand for coffee decreases as income decreases, coffee is a(n) A substitute good. B normal good. C complementary good. D inferior good.
B normal good.
If Leonardo is scalping tickets for a World Cup game, he will be successful at selling the tickets for a profit A when prices are too high. B when the price set by the World Cup organizers is less than the market equilibrium price. C any time teams in the World Cup game are popular. D only when there is excess supply.
B when the price set by the World Cup organizers is less than the market equilibrium price.
An insect that is resistant to currently used pesticides has infested the cotton crop, and this year's crop is only half of what was produced last year. You accurately predict that this A will shift the supply curve of cotton to the right, the equilibrium price of cotton will increase, and the quantity demanded of cotton will decrease. B will shift the supply curve of cotton to the left, the equilibrium price of cotton will increase, and the quantity demanded of cotton will decrease. C will shift the supply curve of cotton to the left, the equilibrium price of cotton will increase, and the demand for cotton will fall. D will shift the supply curve of cotton to the right, the equilibrium price of cotton will increase, and the demand for cotton will fall.
B will shift the supply curve of cotton to the left, the equilibrium price of cotton will increase, and the quantity demanded of cotton will decrease.
The harmful effect of a price ceiling to __________ is ___________ A. producers; the ceiling creates a surplus of the product B. consumers; the ceiling creates a shortage of the product C. producers; the selling price of the product is above the equilibrium price D. consumers; the selling price of the product is above the equilibrium price
B. consumers; the ceiling creates a shortage of the product
If the most someone is willing to pay for ticket to see their favorite team is $100 and the market price of the ticket is $35, then this buyer will get consumer surplus of A 1 ticket. B $35. C $65. D $100.
C $65.
________ refers to the reduction in economic surplus resulting from not being in competitive equilibrium. A Producer atrophy B Marginal cost C Deadweight loss D Economic shortage
C Deadweight loss
Which of the following is an example of a positive statement? A. There should be no unemployment in an advanced industrial society. B. People should pollute as little as possible. C Higher prices cause consumers to purchase less. D Consumption should be distributed fairly in society.
C Higher prices cause consumers to purchase less.
If the market for tires is unregulated and is presently characterized by excess supply, you can accurately predict that price will A increase, the quantity demanded will fall, and the quantity supplied will rise. B decrease, the quantity demanded will fall, and the quantity supplied will rise. C decrease, the quantity demanded will rise, and the quantity supplied will fall. D increase, the quantity demanded will rise, and the quantity supplied will fall.
C decrease, the quantity demanded will rise, and the quantity supplied will fall.
You own the Star Wars six DVD set. The opportunity cost of watching these DVDs for the second time A is one-half the cost of the DVDs, as this is the second time you have watched it. B is zero. C is the value of the alternative use of the time you spend watching the DVDs. D cannot be calculated.
C is the value of the alternative use of the time you spend watching the DVDs.
Suppose the demand for books goes down when the price of video games goes down. We can say that these two goods are A complements. B perfect substitutes. C substitutes. D unrelated goods.
C substitutes.
A price floor is A. the difference between the initial equilibrium price and the equilibrium price after a decrease in supply B. A maximum price set by government that sellers may charge for a good. C. A minimum price set by government that sellers may charge for a good. D. the minimum price that consumers are willing to pay for a good.
C. A minimum price set by government that sellers may charge for a good.
Image of S/D curve, equilibrium at .45 cents If the government will not allow retailers to charge less than .5 for a pencil, which of the following will happen? A. Supply must eventually decrease so that the market will come into equilibrium at a price of .5 B. The market will be in equilibrium at a price of .5 C. Retailers will have an excess supply of pencils D. Demand must eventually increase so
C. Retailers will have an excess supply of pencils
Favored customers are customers who receive special treatment from dealers during periods of A. equilibrium B. price above equilibrium C. excess demand D. excess supply
C. excess demand
Image of S/D curve, equilibrium at .45 cents An example of an effective price floor would be the government setting the price of pencils at A. .00 B.4 C.45 D.5
D .5
DVDs and DVD players are complements. An increase in the price of DVD players would cause which of the following in the market for DVDs? A The equilibrium price of DVDs would decrease and the equilibrium quantity would increase. B The equilibrium price and quantity of DVDs would increase. C The equilibrium price of DVDs would increase and the equilibrium quantity would decrease. D The equilibrium price and quantity of DVDs would decrease.
D The equilibrium price and quantity of DVDs would decrease.
If good weather conditions result in a larger than normal crop of peaches, then the A equilibrium price of peaches falls, and the equilibrium quantity of peaches decreases. B equilibrium price of peaches rises, and the equilibrium quantity of peaches increases. C demand curve for peaches shifts leftward. D equilibrium price of peaches falls, and the equilibrium quantity of peaches increases. E increase in the supply of peaches induces a greater demand for peaches, so that the equilibrium price rises and the equilibrium quantity increases.
D equilibrium price of peaches falls, and the equilibrium quantity of peaches increases.
According to the law of supply, there is a A negative relationship between price and the quantity of a good supplied. B positive relationship between price and the change in supply. C negative relationship between price and the change in supply. D positive relationship between price and the quantity of a good supplied.
D positive relationship between price and the quantity of a good supplied.
he concept of opportunity cost is based on the principle of A need. B consumption. C profit. D scarcity.
D scarcity.
During the Iraq War many of Iraq's oil refineries were destroyed. This would best be represented by a A movement off Iraq's production possibility frontier to some point inside the frontier. B a movement along Iraq's production possibility frontier. C shift of Iraq's production possibility frontier away from the origin. D shift of Iraq's production possibility frontier toward the origin.
D shift of Iraq's production possibility frontier toward the origin.
Opportunity cost is A the additional cost of producing an additional unit of output. B a cost that cannot be avoided, regardless of what is done in the future. C the additional cost of buying an additional unit of a product. D that which we forgo, or give up, when we make a choice or a decision.
D that which we forgo, or give up, when we make a choice or a decision.
Which of the following is the best definition of economics? A the study of how the federal government allocates tax dollars B the study of how consumers spend their income C the study of how business firms decide what inputs to hire and what outputs to produce D the study of how individuals and societies choose to use the scarce resources that nature and previous generations have provided
D the study of how individuals and societies choose to use the scarce resources that nature and previous generations have provided
Among the methods of nonprice rationing are A. coupons B. Waiting in line C. favored customers. D. all the above
D. all the above
PIPEN?/ S or D?
Determinants of DEMAND: (PIPEN) 1) Tastes + Preferences 2) Income 3) Prices of sub/comp 4) Expectations 5) Number of consumers
PATEN?/ S or D?
Determinants of SUPPLY: (PATEN) 1) Price of inputs 2) Advances in technology 3) Taxes and subsidies a. Taxes Increases the cost of production b. Subsidies decrease the cost of production 4) Expectations of future prices 5) Number of sellers
Suppose that over the next few years, the demand for dancing to country and western music decreases. Hence, at country and western dance clubs, the equilibrium price of admission ________, and the equilibrium quantity of dancing ________. A rises; increases B falls; increases C rises; decreases D does not change; decreases E falls; decreases
E falls; decreases
