ECON Quizzes Study Set

When the price of good A is $50, the quantity demanded of good A is 500 units. When the price of good A rises to $70, the quantity demanded of good A falls to 400 units. Using the midpoint method, the price elasticity of demand for good A is A. 1.50, and an increase in price will result in a decrease in total revenue for good A B. 0.67, and an increase in price will result in an increase in total revenue for good A C. 1.50, and an increase in price will result in an increase in total revenue for good A D. 0.67, and an increase in price will result in a decrease in total revenue for good A.

B. 0.67, and an increase in price will result in an increase in total revenue for good A

Refer to Table 4-3. If the law of supply applies to this good, then Q could be A. 0 B. 150 C. 100 D. 50

B. 150

Refer to Figure 2-1. Morgan buys a refrigerator for his new home. To which of the arrows does this transaction directly contribute? C only C and D A only A and B

A and B

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

A,B

Refer to Table 4-2. If these are the only four buyers in the market, then the market quantity demanded at a price of $1 is... A. 31 units. B. 4 units C. 14 units. D. 7.75 units

A. 31 units.

Suppose the number of buyers in a market increases and a technological advancement occurs also. What would we expect to happen in the market? A. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous. B. Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous. C. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous. D. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous.

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

Which of the following statements is valid when the market supply curve is vertical? A. Market quantity supplied does not change when the price changes. B. An increase in market demand will increase the equilibrium quantity. C. Supply is perfectly elastic. D. An increase in market demand will not increase the equilibrium price.

A. Market quantity supplied does not change when the price changes.

Refer to Figure 4-3. The shift from Da to D, in the market for potato chips could be caused by A. an increase in the price of a pretzels. B. a decrease in income, assuming that potato chips are a normal good. C. an announcement by the FDA that potato chips cause cancer. D. a decrease in the price of potato chips.

A. an increase in the price of a pretzels.

Making rational decisions at the margin means that people... A. compare the marginal costs and marginal benefits of each decision B. evaluate how easily a decision can be reversed if problems arise. C. make those decisions that do not impose a marginal cost. D. always calculate the dollar costs for each decision

A. compare the marginal costs and marginal benefits of each decision

When the price of gummy bears is $1.00, the quantity demanded is 500 per day. When the price falls to $0.80, the quantity demanded increases to 600. Given this information and using the midpoint method, we know that the demand for gummy bears is A. elastic B. inelastic. C. perfectly inelastic. D. unit elastic.

A. elastic

In the markets for goods and services in the circular-flow diagram... A. firms provide households with output. B. households provide firms with labor, land, and capital C. firms provide households with profit. D. households provide firms with savings for investment.

A. firms provide households with output.

Elasticity of demand is closely related to the slope of the demand curve. The more responsive buyers are to a change in price, the A. flatter the demand curve will be. B. further to the right the demand curve will sit. C. steeper the demand curve will be. D. closer to the vertical axis the demand curve will sit.

A. flatter the demand curve will be.

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 supply of tires could increase, decrease, or stay the same. B. is unaffected, and the supply of tires increases. C. is unaffected, and the supply of tires decreases. D. decreases, and the supply of tires increases.

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

Refer to Figure 4-7. At a price of $35, there would be a... A. surplus of 400 units. B. shortage of 400 units. C. surplus of 600 units. D. surplus of 200 units.

A. surplus of 400 units.

If something happens to alter the quantity demanded at any given price, then... A. the demand curve shifts. B. the demand curve becomes steeper. C. we move along the demand curve. D. the demand curve becomes flatter.

A. the demand curve shifts.

If the demand for a good falls when income falls, then the good is called... A.a normal good. B. an inferior good. C. an ordinary good. D. a regular good.

A.a normal good.

Which of the following changes would not shift the demand curve for a good or service? A. A change in expectations about the future price of the good or service. B. A change in the price of the good or service. C. A change in income. D. A change in the price of a related good or service.

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

Suppose that an American worker can make 25 pairs of shoes or grow 100 apples per day. On the other hand, a Canadian worker can produce 10 pairs of shoes or grow 10 apples per day. Each country has one worker. Which of the following statements is true? A. The U.S. has both an absolute advantage and a comparative advantage at producing shoes. B. The U.S. has both an absolute advantage and a comparative advantage at producing both goods. C. The U.S. has an absolute advantage at producing both goods, but no comparative advantage. D. The U.S. has both an absolute advantage and a comparative advantage at producing apples

B. The U.S. has both an absolute advantage and a comparative advantage at producing both goods.

The price elasticity of demand measures... A. the movement along a supply curve when there is a change in demand. B. buyers' responsiveness to a change in the price of a good. C. how much more of a good consumers will demand when incomes rise. D. the extent to which demand increases as additional buyers enter the market.

B. buyers' responsiveness to a change in the price of a good.

If the cross-price elasticity of two goods is negative, then the two goods are A. inferior goods. B. complements. C. necessities. D. normal goods.

B. complements

A circular-flow diagram is a model that... A. incorporates all aspects of the real economy. B. helps to explain how the economy is organized C. helps to explain how consumers and the government interact with one another. D. explains how countries trade with each other.

B. helps to explain how the economy is organized

If Harry expects to earn a higher income next month, he may choose to A. decrease his current demand for goods and services. B. save less now and spend more of his current income on goods and services. C. move along his current demand curves for goods and services. D. save more now and spend less of his current income on goods and services.

B. save less now and spend more of his current income on goods and services.

The bowed-outward shape of the production possibilities frontier can be explained by the fact that... A. all resources are scarce B. the opportunity cost of one good in terms of the other depends on how much of each good the economy is producing C. the only way to get more of one good is to get less of the other D. economic growth is always occurring.

B. the opportunity cost of one good in terms of the other depends on how much of each good the economy is producing

Rick and Morty are two woodworkers who both make tables and chairs. In one month, Rick can make 8 tables or 24 chairs, whereas Morty can make 3 tables or 18 chairs. Given this, we know that the opportunity cost of 1 chair is... A.3 tables for Rick and 1/6 table for Morty. B.1/3 table for Rick and 1/6 table for Morty. C.3 tables for Rick and 6 tables for Morty. D.1/3 table for Rick and 6 tables for Morty.

B.1/3 table for Rick and 1/6 table for Morty.

Refer to Table 2-2. What is the opportunity cost to Footville of increasing the production of shoes from 400 to 600? A. 100 socks B. 300 socks C. 400 socks

B.300 socks

Alice decides to spend his afternoon watching three movies rented from Amazon. The cost of each movie is $1. Alice was willing to pay $3 to rent each of the first two movies and $2 to rent the third movie. What was the marginal benefit received by Alice when renting the second movie? A. $1 B. $2 C. $3 D. $6

C. $3

Refer to Figure 4-5. If these are the only two sellers in the market, then the market quantity supplied at a price of $4 is A. 8 units B. 6 units C. 14 units D. 7 units

C. 14 units

Refer to Table 5-1. Which of the following is consistent with the elasticities given in Table 5-1? A. A has fewer substitutes than B. B. A is a good immediately after a price increase and B is that same good three years after the price increase. C. A is a luxury and B is a necessity. D. A is a good after an increase in income and B is that same good after a decrease in income.

C. A is a luxury and B is a necessity.

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 price would decrease, but the impact on equilibrium quantity would be ambiguous. B. Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous. C. Equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous. D. Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.

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

What would happen to the equilibrium price and quantity of coffee if the wages of coffee-bean pickers fell and the price of tea fell? A. Ouantity would rise, and the effect on price would be ambiguous. B. Quantity would fall, and the effect on price would be ambiguous. C. Price would fall, and the effect on quantity would be ambiguous. D. Price would rise, and the effect on quantity would be ambiguous.

C. Price would fall, and the effect on quantity would be ambiguous.

If Shawn can produce more donuts in one day than Sue can produce in one day, then A. Sue has a comparative advantage in the production of donuts B. Sue has an absolute advantage in the production of donuts C. Shawn has an absolute advantage in the production of donuts. D. Shawn has a comparative advantage in the production of donuts.

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

Refer to Figure 4-1. The movement from point A to point B on the graph shows A. an increase in price. B. an increase in income C. a decrease in price D. a decrease in the price of a substitute good

C. a decrease in price

Refer to Figure 4-3. The shift from Da to Do is called A. an increase in quantity demanded. B. a decrease in quantity demanded. C. an increase in demand. D. a decrease in demand.

C. an increase in demand.

Suppose that researchers at OSU discover a new vitamin that increases the milk production of dairy cows. If the demand for milk is relatively inelastic, the discovery will A. raise both price and total revenues. B. raise price and lower total revenues. C. lower both price and total revenues D. lower price and raise total revenues.

C. lower both price and total revenues

Goods with many close substitutes tend to have... A. price elasticities of demand that are unit elastic. B. less elastic demands. C. more elastic demands. D. income elasticities of demand that are negative.

C. more elastic demands.

A competitive market is a market in which... A. the forces of supply and demand do not apply. B. there are only a few sellers. C. no individual buyer or seller has any significant impact on the market price D. an auctioneer helps set prices and arrange sales

C. no individual buyer or seller has any significant impact on the market price

A baker recently has come to expect higher prices for bread in the near future. We would expect... A. no change in the baker's current supply of bread; instead, future supply will be affected. B. the baker to supply more bread now than she was supplying previously. C. the baker to supply less bread now than she was supplying previously. D. the demand for bread to fall.

C. the baker to supply less bread now than she was supplying previously.

You are in charge of the local city-owned aquatic center. You need to increase the revenue generated by the aquatic center to meet expenses. The mayor advises you to increase the price of a day pass. The city manager recommends reducing the price of a day pass. You realize that... A. the mayor thinks demand is elastic, and the city manager thinks demand is inelastic. B. both the mayor and the city manager think that demand is elastic. C. the mayor thinks demand is inelastic, and the city manager thinks demand is elastic. D. both the mayor and the city manager think that demand is inelastic.

C. the mayor thinks demand is inelastic, and the city manager thinks demand is elastic.

Refer to Table 4-5. If the four suppliers listed are the only suppliers in this market and the market demand schedule is: The equilibrium price and quantity are A. $3.00 and 300 cases B. $9.00 and 600 cases C. $0.00 and 1200 cases D. $6.00 and 600 cases

D. $6.00 and 600 cases

An increase in the price of a good will... A. increase demand B. decrease demand, C. increase quantity demanded. D. decrease quantity demanded

D. decrease quantity demanded

Refer to Figure 4-1. It is apparent from the figure that the... A. demand for the good decreases as income increases. B. good is a normal good C. good is inferior. D. demand for the good conforms to the law of demand.

D. demand for the good conforms to the law of demand.

Suppose you like to make, from scratch, pies filled with bananas and vanilla pudding. You notice that the price of bananas has decreased. As a result, your demand for vanilla pudding would A. decrease. B. change but you don't know how without more information. C. be unaffected. D. increase.

D. increase.

Assume that a 4 percent increase in income results in a 2 percent increase in the quantity demanded of a good. The income elasticity of demand for the good is A. negative, and the good is an inferior good. B. negative, and the good is a normal good. C. positive, and the good is an inferior good. D. positive, and the good is a normal good.

D. positive, and the good is a normal good.

The market demand curve... A. is found by vertically adding the individual demand curves. B. represents the sum of the prices that all the buyers are willing to pay for a given quantity of the good C. slopes upward. D. represents the sum of the quantities demanded by all the buyers at each price of the good

D. represents the sum of the quantities demanded by all the buyers at each price of the good

Ian is invited to a costume party. His first thought is to dress up as Magneto, but he is also considering going as Gandalf. The opportunity cost of arriving dressed like Magneto is... a. the money he saves since he doesn't need to purchase Gandalf's wand b. the enjoyment he would have received if he had dressed as Gandalf. c. the cost of purchasing a helmet like those Magneto would wear. d. there is no opportunity cost because he was going to attend the party either way

b. the enjoyment he would have received if he had dressed as Gandalf.

Alice is planning her activities for a hot summer day. She would like to go to the local swimming pool and see the latest blockbuster movie, but because she can only get tickets to the movie for the same time that the pool is open she can only chose one activity. This illustrates the basic principle that... a. improvements in efficiency sometimes come at the expense of equality b. people respond to incentives c. people face tradeoffs d. rational people think at the margin

c. people face tradeoffs

You go to the Gateway Film Center where movies ordinarily cost $9. You are intending to see a movie for which you have a $3-off coupon good for only that movie at that time. However, when you get there you see a friend who asks if you would rather see a new release. Both movies start and end at the same time. If you decide to see the new release with your friend, what is your opportunity cost? a. $3 b. The amount you value the first movie + $9 c. $9 d. The amount you value the first movie + $3

d. The amount you value the first movie + $3

The terms equality and efficiency are similar in that they both refer to benefits to society. However, they are different in that... a. equality refers to everyone facing identical tradeoffs and efficiency refers to the opportunity cost of the benefits. b. equality refers to the opportunity cost of the benefits and efficiency refers to everyone facing identical tradeoffs. c. equality refers to maximizing benefits from scarce resources and efficiency refers to uniform distribution of those benefits. d. equality refers to uniform distribution of those benefits and efficiency refers to maximizing benefits from scarce resources

d. equality refers to uniform distribution of those benefits and efficiency refers to maximizing benefits from scarce resources