Econ Midterm 1 - Correct Answers

Which of the following changes would not shift the demand urge for good or service? a. A change in exceptions about the future price of the good or service b. A change in income c. A change in the price of a related good or service d. A change in the price of the good or service

d. A change in the price of the good or service

Suppose that demand for a good increases and, at the same time, supply of the good decreases. What would happen in the market for the good? a. Equilibrium quantity would decrease, but the impact of equilibrium price would be ambiguous b. Equilibrium price would decrease, but the impact on equalibiurm quanity would be ambiguous c. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous d. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous

d. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous

Which of the following demonstrates the law of demand? a. Iyanna buys fewer muffins at $0.75 per muffin than $1 per muffin, other things equal b. Kendra buys fever Snickers at $0.60 per Snickers after the price of Milky Ways falls to $0.50 per Milky Ways c. After getting a raise at work, Rashad's consumption of pretzels at $1.50 per pretzels increased d. Jayden buys more donuts at $0.25 per donut than at $0.50 per donut, other things equal

d. Jayden buys more donuts at $0.25 per donut than at $0.50 per donut, other things equal

Equilibrium price and quantity are, respectively, Refer to Figure 4-1. a. $25 and 400 units b. $25 and 600 units c. $15 and 200 units d. $35 and 200 units

a. $25 and 400 units

What is the opportunity cost of increasing the production of corn from 400 bushels to 800 bushels? Refer to Table 2-3. a. 400 bushels of wheat b. 800 bushels of wheat c. 200 bushels of wheat d. 600 bushels of wheat

a. 400 bushels of wheat

It is not possible for this economy to produce at point Refer to Figure 2-3. a. C b. A c. D d. B

a. C

At the equilibrium price, the quantity of the good that buyers are willing and able to buy a. exactly equals the quantity that sellers are willing and able to sell b. is less than the quantity that sellers are willing and able to sell c. is a greater than quantity that sellers are willing and able to sell d. could be greater or less than the quantity that sellers are willing and able to sell

a. exactly equals the quantity that sellers are willing and able to sell

What must be given up to obtain an item called a. opportunity cost b. comparative worth c. absolute value d. out-of-pocket cost

a. opportunity cost

Where can an economy not produce? a. outside its production possibilities frontier b. inside its production possibilities frontier c. on its production possibilities frontier d. at the endpoints of its production possibilities frontier

a. outside its production possibilities frontier

Which of the following events could cause an increase in the supply of ceiling fans? a. the number of sellers of ceiling fans increases b. the average temperatures rises over time c. There is an increase in the price of air conditioners, and consumer regard air conditioners and ceiling fans as substitutes d. There is an increase in the price of the motor that powers ceiling fans

a. the number of sellers of ceiling fans increases

Ken and Traci are two woodworkers who both make tables and chairs. In one month, Ken can make 3 tables or 18 chairs, whereas Traci can make 8 tables or 24 chairs. Given this, we know that the opportunity cost of 1 chair is a. 1/6 table for Ken and 3 tables for Traci b. 1/6 table for Ken and 1/3 table for Traci c. 6 tables for Ken and 1.3 table for Traci d. 6 tables for Ken and 3 tables for Traci

b. 1/6 table for Ken and 1/3 table for Traci

Arturo's opportunity cost of one burrito is Refer to Figure 3-3. a. 4/3 tacos and Diana's opportunity cost of one burrito is 1/2 taco b. 4/3 tacos and Dina's opportunity cost of one burrito is 2 tacos c. 3/4 taco and Dina's opportunity cost of one burrito is 2 tacos d. 3/4 taco and Dina's opportunity cost of one burrito is 1/2 taco

b. 4/3 tacos and Dina's opportunity cost of one burrito is 2 tacos

Refer to Figure 3-3. If Arturo and Dina both spend all of their time producing tacos, then total production is a. 400 tacos and 0 burritos b. 800 tacos and 0 burritos c. 800 tacos and 500 burritos d. 400 tacos and 250 burritos

b. 800 tacos and 0 burritos

Efficient production is represented by which point(s)? Refer to Figure 2-3. a. A, B, and C b. A, B c. C d. A, B, and D

b. A, B

Which arrow represents the flow of goods and services? Refer to Figure 2-1. a. C b. B c. D d. A

b. B

if Iowa's opportunity cost of acorn is lower than Oklahoma's opportunity cost of corn, then a. Iowa has an absolute advantage in the production of corn b. Iowa has a comparative advantage in the production of corn c. Iowa should import corn from Oklahoma d. Oklahoma should produce just enough corn to satisfy its own residents' demands

b. Iowa has a comparative advantage in the production of corn

Which of the following demonstrates the law of supply? a. When sweater producers expected sweater prices to ruse in the near future, they decreased their current supply of sweaters b. When ketchup prices rose, ketchup sellers increased their quantity supplied of ketchup c. When leather became more expensive, belt producers decreased their supply of belts d. When car production technology improved, car producers increased their supply of cars

b. When ketchup prices rose, ketchup sellers increased their quantity supplied of ketchup

If the demand for a product increases, then we would expect equilibrium price a. and equilibrium quantity both to decrease b. and equilibrium quantity both to increase c. to decrease and equilibrium quantity to increase d. trade can make everyone better off

b. and equilibrium quantity both to increase

In the circular-flow diagram, in the markets for a. the factors of production, households are buyers and firms are sellers b. goods and services, households are buyers and firms are sellers c. the factors of production, households and firms are both buyers d. goods and services, households and firms are both sellers

b. goods and services, households are buyers and firms are sellers

According to the circular-flow diagram, if Jaylssa is a worker who delivers flowers for Happy Day Flower Company, she participates a. in the markets for goods and services changing flowers for wages, rent, and profit b. in the markets for factors and production exchanging labor for income c. in the markets for goods and services exchanging labor for income d. in the markets for factor of production exchanging flowers for revenue

b. in the markets for factors and production exchanging labor for income

In the circular-flow diagram, a. services flow from households to firms b. labor flows from households to firms c. goods flow from households to firms d. profit flows from households to firms

b. labor flows from households to firms

Suppose that you plan your actives for a hot summer day. You would like to go to the local swimming pool and see the latest blockbuster movie. However, the only available ticket is for the same time that the pool is open. So you can only choose one acitivty. This illustrates the basic principle that a. improvement in efficiency sometimes come at the expense of eqiuality b. people face tradeoffs c. people respond to incentives d. rational people think at the margin

b. people face tradeoffs

Market powers refers to the a. importance of a certain market in a relation to the overall economy b. power of a single person or small group to influence market prices c. power of the government to regulate a market d. ability of a person or small group to successfully market new products

b. power of a single person or small group to influence market prices

Fundamentally, economics deals with a. money b. scarcity c. banking d. poverty

b. scarcity

Suppose that a decrease in the price of good X results in fewer units of good Y being demanded. This implies that X and Y are a. normal goods b. substitute goods c. inferior goods d. complementary goods

b. substitute goods

If boxes A and B represent households and firms, then boxes C and D of this circular-flow diagram represent Refer to Figure 2-2. a. consumers and producers b. the markets for goods and services and the markets for factors of production c. the markets for goods and services and the market for financial assets d. government and foreingers

b. the markets for goods and services and the markets for factors of production

If a supply of a product increases, then we would expect equilibrium price a. and equilibrium quantity to both increase b. to decrease and equilibrium quantity to increase c. to increase and equilibrium quantity to decrease d. and equilibrium quantity to both decrease

b. to decrease and equilibrium quantity to increase

If the law of demand applies to this good, then Q1 could be Refer to Table 4-1. a. 100 b. 200 c. 0 d. 400

c. 0

Assume that Jamaica and Norway can switch between producing coolers and producing radios at a constant rate Refer to Table 3-11. Jamaica's opportunity cost of one cooler is a. 0.5 radios, and Norway's opportunity cost of one cooler is 8 radios b. 2 radios, and Norway's opportunity cost of one cooler is 0.125 radios c. 0.5 radios, and Norway's opportunity cost of one cooler is 0.125 radios d. 2 radios, and Norway's opportunity cost of one cooler is 8 radios

c. 0.5 radios, and Norway's opportunity cost of one cooler is 0.125 radios

If the law of supply applies to this good, then Q1 could be Refer to Table 4-3. a. 100 b. 50 c. 150 d. 0

c. 150

What is the opportunity cost of Footville of increasing the production of shoes from 400 to 600? Refer to Table 2-2. a. 100 socks b. 400 socks c. 300 socks d. 200 socks

c. 300 socks

Specializing only in lemonade, Alice can produce Refer Figure 3-4. a. 450 pitchers per day b. 300 pitchers per day c. 400 pitchers per day d. 200 pitchers per day

c. 400 pitchers per day

If this economy devotes all of its resources to the production of dryers, then it will produce Refer to Figure 2-3. a. 80 dryers and 50 washers b. 0 dryers and 100 washers c. 80 dryers and 0 washers d. 60 dryers and 50 washers

c. 80 dryers and 0 washers

If point A represents Alice's production and point B represents Betty's production, Refer to Figure 3-4. a. Alice produces 180 pitches of lemonade and 180 pizzas, while Betty produces 200 pitchers of lemonade and 100 pizzas b. Only Alice can benefit from specialization and trade c. Alice produces 200 pitchers of lemonade and 100 pizzas, while Betty produces 180 pitchers of lemonade and 180 pizzas d. Alice produces 100 pitchers of lemonade and 200 pizzas, while Betty produces 180 pitchers of lemonade and 180 pizzas

c. Alice produces 200 pitchers of lemonade and 100 pizzas, while Betty produces 180 pitchers of lemonade and 180 pizzas

Which of the following would shift the demand curve for gasoline to the right? a. A decrease in the price of gasoline b. An increase in the price of cars, a complement for gasoline c. An increase in consumer income, assuming gasoline in a normal good d. A decrease in the expected future price of gasoline

c. An increase in consumer income, assuming gasoline in a normal good

In the circular-flow diagram, which of the following items flows from households to firms through the market for goods and services? a. Dollars paid to land, labor, and capital b. Goods and services c. Dollars spent on the goods and services d. Wages, rent, and profit

c. Dollars spent on the goods and services

If Shawn can produce more donuts in one day than Sue can produce in one then, a. Sue has an absolute advantage in the production of donuts b. Shawn has a comparative advantage in the production of donuts c. Shawn has an absolute advantage in the production of donuts d. Sue has a comparative advantage in the production of donuts

c. Shawn has an absolute advantage in the production of donuts

Which of the following would shift the supply of Green Bay Packers football jerseys to the left? a. The Green Bay Packers make it to the Super Bowl b. The technology of sewing machines used to make the jerseys improves c. The cost of the fabric used to make the jerseys increases d. The price of the jerseys increases by $15

c. The cost of the fabric used to make the jerseys increases

Suppose an increase in the price of rubber coincides with an advance in the technology of tire production. As a result of these two events, the demand for tires a. is unaffected, and the apply of tires decreases b. is unaffected, and the supply of tires increases c. is unaffected, and the supply of tires could increase, decrease, or stay the same d. decreases, and the supply of tires increases

c. is unaffected, and the supply of tires could increase, decrease, or stay the same

While pollution regulations yield the benefit of a cleaner environment and the improved health that comes with it, the regulation come at the cost of reducing the incomes of the regulated firms' owners, workers, and customers. This statement illustrates the principle that a. rational people think at the margin b. people respond to incentives c. people face tradeoffs d. trade can make everyone better off

c. people face tradeoffs

The phenomenon of scarcity stems from the fact that a. government restrict production of too many goods and services b. in most economies, wealthy people consume disproportionate quantities of goods and services c. resources are limited d. most economies' production methods are not very good

c. resources are limited

The overriding reason why households and societies face many decisions is that a. people, by nature, tend to disagree b. goods and services are not scarce c. resources are scarce d. income fluctuate with business cycle

c. resources are scarce

What term refers to the idea that society has limited resources and therefore cannot produce all the goods and services people wish to have? a. inefficient b. market failure c. scarcity d. inequality

c. scarcity

Economics is the study of how society manages its a. limited wants and limited resources b. unlimited wants and unlimited resources c. unlimited wants and limited resources d. limited wants and unlimited resources

c. unlimited wants and limited resources

Suppose Jim and Tom can both produce two goods: baseball bats and hockey sticks. Which of the following is not possible? a. Jim has an absolute advantage in the production of baseball bats and in the production of hockey sticks b. Jim has an absolute advantage in the production of hockey sticks and a comparative advantage in the production of baseball bats c. Jim has an absolute advantage in the production of baseball bats and a comparative advantage in the production of hockey d. Jim has a comparative advantage in the production of baseball bats and in the production of hockey sticks

d. Jim has a comparative advantage in the production of baseball bats and in the production of hockey sticks

Devin works as an attorney for a corporation and is paid a salary in exchange for the legal services he performs. If Devin's income is represented by a flow of dollars from Box D to Box B of this circular-flow diagram, then the revenue earned by a firm selling its product is represented by a flow of dollars Refer to Figure 2-2. a. from Box A to Box C b. from Box B to Box C c. from Box C to Box B d. from Box C to Box A

d. from Box C to Box A

. The opportunity cost of obtaining 40 additional dryers by moving from point D to point C is Refer to Figure 2-3. a. 40 washers b. 20 washers c. 0 washers d. impossible to calculate because the economy cannot move from point D to point C

d. impossible to calculate because the economy cannot move from point D to point C

Refer to Figure 2-3. This economy cannot currently produce 70 washers and 70 dryers because (picture figure) a. consumers don't want that many washers and dryers b. it is not using the most efficient production process c. it is not using all of its resoucres d. it does not have the resources and technology to produce that level of output

d. it does not have the resources and technology to produce that level of output

Thousands of people develop ling cancer from second-hand exposure to cigarette smoke. This is an example of a. a market failure caused by equality b. a market failure caused by market power c. no market failure d. market failure caused by an externality

d. market failure caused by an externality

Timothy decides to spend four hours playing video games rather attending class. Timothy's opportunity cost of playing games is a. nothing, since Timothy valued playing video games more than attending class b. income Timothy could have earned working a job for those four hours c. the value of time playing video games minus the value of attending class d. the value of the knowledge Timothy would have received by attending class

d. the value of the knowledge Timothy would have received by attending class