Econ Final Studyguide

A perfectly elastic demand curve is A. Horizontal B. Curvilinear C. Vertical D. Upward sloping

A

Adam Smith's "invisible hand" refers to A. the process by which individuals acting in their own self-interest bring about a market outcome that benefits society as a whole B. property ownership laws and the rule of court system C. The laws of nature that influence economics decisions D. The government's unobtrusive role in ensuring that the economy functions efficiently

A

Cross-price elasticity of demand is calculated as A. Percentage change in Quantity Demanded of one good divided by the percentage change in price of a different good B. Percentage change in quantity demand divided by percentage change in price of the same good C. Percentage change in quantity supplied divided by percentage change in price of a good D. Percentage change in quantity sold divided by percentage change in buyers' incomes.

A

For people who live near a bus route, a subway station, or a commuter rail line, public transportation provides a substitute to driving their own cars. So, for these people, the cross-price elasticity of demand between gasoline and public transportation is A. Positive B. Infinity C. Zero D. Negative

A

If Callum is consuming his utility maximizing bundle of two commodities book and puzzles. The price of books rises, what happens to the marginal utility per dollar spent on this good (MU/P), and what should Callum do to move toward a new maximizing bundle of puzzles? A. MU/P has decreased. Callum should buy less books B. MU/P has increased. Callum should buy less books C. MU/P has increased. Callum should buy more books MU/P has decreased. Callum should buy more books

A

If the absolute value of the price elasticity of demand for aspirin = .8 then A. Demand for aspirin is inelastic B. aspirin is a normal good C. Demand for aspirin is elastic D. Aspirin has few substitutes

A

In the United States, consumers usually pay __________ than the true cost of medical treatment because of ___________. A. less; 3rd party payers B. Less; rising insurance deductibles C. More; adverse selection D. More; rising insurance premiums

A

Orange Juice drinkers want to consume more orange juice at a lower price. Which of the following events would have this effect? A. Decrease in the price of orange juice processing B. Increase in cost of fertilizer for orange groves C. Decrease in population D. Decrease in income, assuming OJ is a normal good

A

Private costs A. are borne by producers of a good while social costs are born by society at large B. are borne by producers of a good while social costs are born by government C. are born by consumers of a good while social costs are borne by the government D. are borne by producers of a good while social costs are borne by those who cannot afford to purchase the good.

A

Specializing in the production of a good or service in which one has a comparative advantage enables a country to do all of the following except A. Increase the variety of products that it can consume with no increase in resources B. Produce a combination of goods that lies outside its own production possibilities frontier C. Consume a combination of goods that lies outside its own production possibilities frontier D. engage in mutually beneficial trade with other nations

A

Sunk costs A. Are costs that have already been paid and cannot be recaptured in any significant way B. Are important for optimal decision making C. Are costs associated with repairing something you already own D. Are costs that firms sink into marketing

A

The term is used to refer to a situation in which one party to an economic transaction has less information than the other party is A. Asymmetric information B. Moral Hazard C. Inefficient market hypothesis D. Information disparity

A

The total amount of producer surplus in a market is equal to A. The area above the market supply curve and below market price B. The difference between quantity supplied and quantity demanded C. The area above the market supply curve D. The area between the demand curve and supply curve below the market price

A

A curve that shows the combinations of consumption bundles that give a consumer the same utility is called A. A preference curve B. An indifference curve C. a demand curve D. A utility curve

B

A goal of market-based reforms of the health care system is to give patients an incentive to pay more attention to the prices of medical services. For example, incentives given to patients who compare and use alternative facilities for a non-emergency MRI scan. This would tend to _______ economic efficiency by ______ the cost of providing. A. Increase; increasing B. Increase; decreasing C. Decrease; decreasing D. Decrease; increasing

B

All of the following are part of the individual mandate provision of the patient protection and affordable care act (ACA) except A. Individuals who do not acquire health insurance will be subject to a fine B. Individuals were allowed to opt out of the insurance program if they could prove they had no serious health issues and did so before the act fully took effect in year 2014 C. in 2017, fines for not having health insurance are greater of 695 per person or 2.5 percent of income D. with limited exceptions, every resident of the United States will be required to have health insurance that meets certain basic requirements

B

An advantage of imposing a tax on the producer that generates pollution is that A. it will eliminate pollution B. it forces the polluting producer to internalize the external cost of the pollution C. a producer can pass the cost of pollution to consumers D. the government can keep tabs on exactly what is produced in an industry

B

Automobile insurance companies have a problem with people who buy insurance and then drive recklessly or take less care to avoid losses after being insured. In other words, the automobile insurance market is subject to A. Market signaling B. Moral Hazard C. Adverse selection D. Asymmetric information

B

Economists refer to a market where buying and selling take place at prices that violate government price regulations as A. an outlaw market B. A black market C. a restricted market D. a noncompetitive market

B

If Marlowe obtains 9 units of utility per dollar spent on apples and 6 units of utility per dollar spent on oranges, then Marlowe A. should buy fewer oranges and fewer apples B. shoulder buy more apples and fewer oranges C. is maximizing total utility D. should buy more oranges and fewer apples

B

Price elasticity of demand measures A. How responsive suppliers are to price changes B. How responsive Q demanded is to a change in price C. How responsive sales are to a change in buyers' incomes D. How responsive sales are to changes in price of a related good

B

State and local governments subsidize college students with grants and low-interest loans. The loans and subsidies are examples of A. positive externalities B. Pigovian subsidies C. Coase subsidies D. Emission allowances

B

Suppose the U.S. government encouraged new medical school graduates to take over existing practices from doctors wishing to retire by paying both the new and retiring doctors $100,000. These doctors would be exemplifying the economic idea that A. people are rational B. People respond to economic incentives C. Optimal decisions are made at the margin D. Equity is more important than efficiency

B

The law of demand implies, holding everything else constant, that as the price of bagels increases A. The demand for bagels will increase B. The quantities of bagels demanded will decrease C. "" will increase D. the demand for bagels will decrease

B

The market demand for a public good can be determined by A. adding up the total private benefits and external benefits that each quantity provides the citizens of a country B. adding up how much each consumer is willing to pay for each unit of the public good C. adding up how much each citizen expects to consume at each possible price D. estimating the value of the benefit that each unit provides and multiplying that by the number of consumers

B

What is the difference between an increase in demand and an increase in quantity demanded? A. There is no difference between the two terms; they both refer to a shift of the demand curve B. An increase in demand is represented by a rightward shift of the demand curve while an increase in quantity demand is represented by a movement along a given demand curve C. An increase in demand is represented by a movement along a given demand curve while an increase in quantity demanded is represented by a rightward shift of the demand curve D. There is no difference between the 2 terms; they both refer to a movement downward along a given demand curve

B

Which of the following is not a result of imposing a rent ceiling A. There is a reduction in the quantity of apartments supplied B. Some Consumer Surplus is converted to producer surplus C. There is an increase in the quantity of apartments demanded D. The marginal benefit of the last apartment rented is greater than the marginal cost of supplying it

B

Assume that you had a ticket for a MU basketball NCAA playoff game that you bought for 50, the max price you were willing to pay. If a friend of yours offers to buy the ticket for 100 but you decide not to sell, how can you decision be explained? A. by the law of diminishing marginal utility B. You expect to receive greater utility from attending the playoff game than you received from buying the ticket C. by the endowment effect D. The income effect from the increase in the price of the ticket from 50 to 100 was greater than the substitution effect

C

Consumers are willing to purchase a product up to the point where A. the consumer surplus is equal to the producer surplus B. the marginal benefit of consuming the product is equal to the marginal cost of consuming it C. the marginal benefit of consuming a product is equal to its price D. the marginal benefit of consumer the product equals the area below the supply curve and above the market price

C

If the cross-price elasticity of demand for computers and software is negative, this means 2 goods are A. Inferior B. normal C. Complements D. Substitutes

C

Public goods are distinguished by 2 primary characteristics. What are they? A. Market failure and high prices B. Rivalry and exclusivity C. nonrivalry and nonexcludability D. government intervention and low prices

C

The ____________ demonstrates the roles played by households and firms in the market system. A. Business Cycle B. Production possibilities frontier C. Circular Flow Model D. Theory of comparative advantage

C

The actual division of the burden of the tax between buying and sellers in a market is called A. Tax parity B. Tax liability C. Tax incidence D. Tax bearer

C

The economic model of consumer behavior predicts that A. Consumers will try to earn as much income as they can over their lifetimes B. Consumers will try to accumulate as many goods and services as they can before they die C. Consumers will choose to buy the combination of goods and services that make them as well off as possible from those combinations that their budgets allow them to buy D. Consumers divide their time between consumption and leisure activities in order to maximize social welfare

C

The first economist to systematically analyze market failure due to externalities was A. Adam Smith B. Ronald Coase C. A. C. Pigou D. J. E. Meade

C

The production possibilities frontier model shows that A. Economic growth can only be achieved by Free Market economies B. If consumers decide to buy more of a product, its price will increase C. If all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good D. A market economy is more efficient in producing goods and services than is a centrally planned economy

C

To affect the market outcome, a price ceiling A. Must be set above the legal price B. Must be set below the black market price C. Must be set above the equilibrium price D. Must be set below the equilibrium price

C

What is the principal-agent problem? A. It is a problem caused by a person who hires an agent to act on his behalf but is unwilling to delegate authority to the agent to carry out the task in the best possible way B. It is a problem that exists when a person has more information about the task than the agent he hires to perform the task C. It is a problem caused by agents pursuing their own interesting rather than the interests the principals who hired them D. It is a problem of the power system of boss and subordinate where the boss exerts influence over his subordinates using punishment or threat

C

When the government taxes a good or service, it A. Increases consumer surplus for the good or service B. Eliminates the deadweight loss associated with the good or service C. Affects the market equilibrium for that good or service D. increases producer surplus for the good or service

C

Which of the following is an example of a positive externality? A. a police department stops enforcing DUI laws B. Raising the speed limit to 60 MPH in school zones C. Planting trees along a sidewalk which add beauty and create shade D. Permitting smoking on commercial airplanes

C

A positive externality results when A. economists are sure that a good or service provides benefits to consumers B. people who live in 1 country benefit from the production of a good or service that occurs in another country C. Someone pays for a good or service even though she is not directly affected by production or consumption of it D. people who are not directly involved in producing or paying for a good or service benefit from it

D

Because consumers who have insurance provided by their employers usually only pay a deductible or small co-payment for a visit to the doctor's office, A. the doctors supply a smaller quantity of health care services than they would if the consumer paid a price that better represented the true cost of providing the service B. they demand a smaller quantity of health care services than they would if they paid a price that better represented the true cost of providing the service C. the insurance companies provide a larger quantity of health care services than they would if the consumer paid a price that better represented the true cost of providing the service D. they demand a larger quantity of health care services than they would if they paid a price that better represented the true cost of providing the service

D

By definition, economics is the study of A. How to make money in the stock market B. Supply and Demand C. How to make money in a market economy D. The choices people make to attain their goals, given their scarce resources

D

Comparative advantage means the ability to produce a good or service A. At a higher profit level than any other producer B. At a lower selling price than any other producer C. of a higher quality than any other producer D. at a lower opportunity cost than any other producer

D

For each watch that Switzerland produces, it gives up the opportunity to make 50 pounds of chocolate. Germany can produce 1 watch for every 100 pounds of chocolate it produces. Which of the following is true about the comparative advantage between the two countries? A. Germany has a comparative advantage in watches and chocolate B. Switzerland has the comparative advantage in chocolate C. Germany has the comparative advantage in watches D. Switzerland has the comparative advantage in watches

D

If there is a price increase for a muffin at the Brew Bayou Cafe, a normal good you enjoy, then A. The substitution effect which causes you to decrease your muffin consumption outweighs the income effect which causes you to increase your muffin consumption, resulting in fewer Brew Bayou muffins purchased B. The income effect which causes you to decrease your muffin consumption outweighs the substitution effect which causes you to increase your muffin consumption, resulting in fewer Brew Bayou muffins purchased C. The income and substitution effects offset each other but the price effect leads you to buy fewer muffins at the Brew Bayou D. Both the income and substitution effects lead you to buy fewer muffins at the brew bayou

D

Marginal Utility can be A. Negative B. Zero C. Positive D. Positive, negative, or zero.

D

Suppose that when the price of hamburgers decreases, the Ruiz family increases their purchases of ketchup. To the Ruiz family, A. Hamburgers and ketchup are substitutes B. Hamburgers and ketchup are normal goods C. Hamburgers are normal goods and ketchup is an inferior good D. Hamburgers and ketchup are complements

D

Suppose the marginal utilities for the first 3 cans of soda are 100, 80. and 60, respectively. The total utility receive from consuming 2 cans is A. 20 B. 80 C. 90 D. 180

D

The health care system in the UK is referred to as ______, under which the government owns most of the hospitals and employs most of the doctors. A. an out-of-pocket system B. A single-payer health care system C. A universal health insurance system D. Socialized Medicine

D

The supply curve for watches A. is downward sloping B. Shows the supply of watches consumers are willing and able to buy at any given price C. Shows the relationship between the quantity of watches firms are willing and able to supply and the quantity of watches consumers are willing and able to purchase D. Shows the relationship between the price of the watches and quantity of watches supplied

D

Which of the following would result in a higher absolute value of the price elasticity of demand for a product? A. The good is a necessity B. The time period under consideration is short C. The expenditure on the good is small relative to one's budget D. A wide variety of substitutes are available for the good

D

18 in exam 1

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24 IN Exam 1

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See exam 1 for number 6

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25 in exam 1

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34 in exam 1

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See 10 in exam 2

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