Econ Tests

c. a normal good

If the income elasticity if demand of a goo is positive, we can conclude that the good is: a. a substitute b. an inferior good c. a normal good d. a complementary good

d. are many sellers and each producer its own version of the product

A characteristic of monopolistic competition that is not present in any other market structure is that there... a. are more sellers that produce identical products b. is only one seller and that seller holds a higher level of market power c. are small number of sellers who have market power d. are many sellers and each producer its own version of the product

c. that cannot be recovered no matter what decision is made

A sunk cost is a cost... a. that does not change when the output can be recovered in the long run b. that sinks when output decreases c. that cannot be recovered no matter what decision is made d. the first cost incurred when beginning production

b. reduce the size of the popcorn market because fewer units of popcorn will be traded

A tax on sellers of popcorn will: a. may increase, decrease, or have no effect on the size of the popcorn market b. reduce the size of the popcorn market because fewer units of popcorn will be traded c. increase the size of the popcorn market because more units of popcorn will be traded d. have no effect on the size of the popcorn market because sellers will pay

$4.40

According to the figure, the price that sellers receive AFTER the tax is imposed is:

$175

According to the figure, what is the consumer tax burden in the market below?

b. john should specialize in cakes

Anita is a wonderful baker and can bake 10 cakes in a dy, but she has no time left to make cookies. If she bakes cookies, she can make 200 cookies in a day. John can make equally delicious cakes and cookies but can only make 7 cakes or 100 cookies in a day. based on this information, which of the following statements are TRUE? a. Anita has the comparative advantage in the production of cakes b. john should specialize in cakes c. If Anita bakes all the cake and John makes all the cookies, they can maximize their output of both items. d. Anita should produce both cakes and cookies, because she is faster at both.

c. Tax revenue will exactly less than the amount of the lost consumer an producer surplus

Assume the government puts $2 units excise tax on gadgets. Which of the following statements is true? a. There will be no dead weight loss b. Tax revenue will exactly equal the amount of the lost consumer an producer surplus c. Tax revenue will exactly less than the amount of the lost consumer an producer surplus d. Tax revenue will exactly greater than the amount of the lost consumer an producer surplus

a. 6; 4; surplus of 4 units

At a price of $3, quantity supplied is ______ and quantity demanded is ______, leading to ______. a. 6; 4; surplus of 4 units b. 2;4; surplus of 2 units c. 4;2; shortage of 2 units d. 2;6; shortage of 8 units

a. As real GDP per person rises, maternal and fetal health increase due to better healthcare, education, sanitation, and nutrition.

Consider the following graph that illustrates the relationship between GDP per capita and infant deaths per 1,000 live births. What can explain this relationship. a. As real GDP per person rises, maternal and fetal health increase due to better healthcare, education, sanitation, and nutrition. b. As life expectancy increases, GDP per person increases at the same rate. c. As real GDP per person rises, the standard of living for families fall. d. Infant morality declines only when GDP per person is above $25,000 per year.

abc; a

Consumer surplus before $4 tax is ______, and consumer surplus after the $4 tax is ______.

a. the multiplier effect

Fiscal policy is increased in its effectiveness through: a. the multiplier effect b. monetary policy c. administrative lags d. crowding out

b. Elasticity of demand has nothing to do with tax burdens, the market price goes up by the amount of the tax

If we assume the demand for cigarettes are relatively inelastic, which of the following statements is TRUE regarding cigarette taxes? a. The consumer tax burden is larger than the producer tax burden, so the increase in the market price consumers pay will be relatively large. b. Elasticity of demand has nothing to do with tax burdens, the market price goes up by the amount of the tax c. The dead weight loss will be less than the producer tax burden so the increase in the market price consumers pay will be relatively large. d. The producer tax burden is larger than the consumer tax burden, so the increase in the market price consumers pay will be relatively large.

b. is when resources are limited; requires choices with opportunity cost

Scarcity ______ and ______. a. happens only in a few economies around the world; means they always have shortages in the market b. is when resources are limited; requires choices with opportunity cost c. can be fixed with good economic policy; results in low inflation d. is when a resource is completely used up; leads to surplus

False

T/F If the price of ski lift tickets increases, the demand for the ski lift tickets will increase; ceteris paribus.

a. Existing sellers in the market earing economic profit

What will attract new sellers in a market? a. Existing sellers in the market earing economic profit b. Fewer sellers in the market than a year previously A large number of sellers already in the market d. A market that has not changes in several years

a. have zero economic profit

When a market has free entry and exit, sellers ______ in the long run. a. have zero economic profit b. have positive profits c. suffer economics d. tend to leave the market

figure C

If the figures represent the market for a popular soda, which figure shows the effect of an increase in the price of a competing energy drink that is considered a substitute by many consumers?

yes

A friend of mine just told me, "The fact that cross price elasticity of demand for dog collars and leashes is negative means that people often buy collars nd leashes together." is my friend correct?

d. equals this price

A perfectly competitive firm maximizes its profit when marginal cost: a. is minimized b. is less than the price c. is greater than the price d. equals this price

ii. and iv.

A price ceiling that moves the market away from equilibrium would ______. i. increase the market price ii. decrease the market price iii. increase the quantity sold in the market iv. decrease the quantity sold in the market

b. the current price is greater than the equilibrium price

If sellers want to sell more products than buyers are willing to purchase, we now what: a. the current price is less than the equilibrium price b. the current price is greater than the equilibrium price c. quantity demanded exceeds quantity supplied d. the demand curve will likely increase

d. marginal revenue is always lower for the next unit sold

For a monopolist, MR is always less than P because: a. when a monopoly lowers the price to sell more units, it must lower the price of all units sold b. MR is always less than P regardless of what type of firm we are discussing c. when a monopolist needs to sell more units, it must lower marginal revenue in order to do so d. marginal revenue is always lower for the next unit sold

b. above the equilibrium price, causing a market surplus

For a price floor to prevent market forces from finding the equilibrium price, it must be sit: a. above the equilibrium price, causing a market shortage b. above the equilibrium price, causing a market surplus c. below the equilibrium price, causing a market shortage d. below the equilibrium price, causing a market surplus

-2

Good X and Good Y are related goods. When the price of Good X rises by 20%, the quantity demanded for Good Y falls by 40%. What is the cross price elasticity?

c. spending; tax policies

If a government is using fiscal policy, this means that it is using ______ and ______ to attempt to stabilize the economy. a. interest rates; tax policies b. bonds; stock markets c. spending; tax policies d. spending; interbank loans

b. no shortage or surplus

If a price floor were set at $10, there would be ______. a. a shortage of 20 units b. no shortage or surplus c. a surplus of 40 units d. a shortage of 40 units

b. raise; cool inflationary pressure

If the output gap is positive, the federal reserve will ______ the real interest to ______. a. lower; cool inflationary pressures b. raise; cool inflationary pressure c. raise; reduce unemployment d. lower; reduce unemployment

c. rise 20%

If the price elasticity of supply is 4, an increase in the price f Good X by 5% causes the quantity supplied of it to: a. fall 20% b. fall 1.25% c. rise 20% d. rise 1.25%

-.47

If the price of Good X rises from $4 to $5, and the quantity demanded of its falls from 200 units to 180 units, the absolute value of the price elasticity of demand is:

Figure D

If these figures represent the market for new cars, which figure shows the effect of an economic recession in which many people lose their jobs?

a. operating above capacity, and inflation will likely rise

If unemployment is below its sustainable level, then the economy is: a. operating above capacity, and inflation will likely rise b. operating below capacity, and inflation will likely fall c. experience below normal growth rates. d. at potential GDP, and inflation at its target level.

a. on average, price went down across the economy

If you see that the consumer price index this year is lower than the consumer price index last year, this means: a. on average, price went down across the economy b. economic growth also decreased c. the price of each and every good and service went down d. the consumer price index is lower than the producer price index

$35,312.50

In 2004, Canada's GDP was approximately $1.13 million. The price index was 115, and its population was about 32 million. What was Canada's nominal GDP per capita in 2004?

5.1%

In December 2018, West Virginia reported a population of 986,000 people an a civilian labor force of 784,574. The number of employed people was 744,178. What was the unemployment rate?

a. perfectly elastic

In a perfectly competitive industry, demand for one firm's product is ______. a. perfectly elastic b. unit elastic c. perfectly inelastic d. slightly elastic

c. price; less than price

In a perfectly competitive market, company's marginal revenue equals ______. For a company with market power, marginal revenue is ______. a. marginal cost; greater than marginal cost b. marginal cost; less than marginal cost c. price; less than price price; greater than price

b. at any output between three and 14

JoJo's company data is in the graph. JoJo would earn a profit... a. at any output between eight and 18 b. at any output between three and 14 c. only at an output of nine d. at all output levels

d. Joe's implicit opportunity cost of using a bedroom as a home office would increase

Joe runs a landscaping company and uses one of the bedrooms in his home as a home office. Instead, this office could have been used to earn rental income from college students. If average rental income in Joe's neighborhood were to rise: a. Joe's implicit opportunity cost of using a bedroom as a home office would decrease b. Joe's landscaping company would experience a decrease in demand for services at all prices so his explicit cost would increase. c. Joe should expand his office space in his home because his explicit cost would decrease d. Joe's implicit opportunity cost of using a bedroom as a home office would increase

c. GDP in Korea is negatively effected because cars must be imported

Kia Motors is listed as a Korean company. The company announces a new plan to produce Kia automobiles in Pakistan and sell them in Korea. How foes this change affect the GDP in Korea? a. GDP in Korea increases due to decrease in labor cost. b. GDP in Korea increases due to an investment in education c. GDP in Korea is negatively effected because cars must be imported d. GDP increases due to capital accumulation.

a. Corrupt government officials that protect local industry

Long run economic growth is supported by inclusive institutions. Which option is NOT an inclusive institution according to economists Acemodula and Robinson? a. Corrupt government officials that protect local industry b. Well developed financial markets c. Private property rights d. A strong and impartial court system

a. Consumers have started wearing wool sweaters instead of sweatshirts

On a recent trip to the mall, Juan noticed that hoodie sweatshirts are less expensive that they were last month. Which of the following can explain why the market price of the hoodie is now lower? a. Consumers have started wearing wool sweaters instead of sweatshirts b. The mall is experiencing a shortage of hoodie sweatshirts c. It is getting colder, so more consumers want to buy warm clothes d. The price of cotton, used to make the sweatshirts has recently skyrocketed.

a. The unemployment rate will fall

Smallandia is a country with a population of 50 people. There are currently 5 unemployed people and an unemployment rate of 11.1%. Which of the following things will happen when one unemployed person gets discouraged and stops actively looking for a job? a. The unemployment rate will fall b. The unemployment rate will rise c. Smallandia's labor force will grow d. Smallandia's labor force participation rate will stay the same

True

T/F In a perfectly competitive market with downward sloping demand and upward sloping supply, a tax increases the market price consumers pay, reduces the price producers keep, and decreases the quantity of goods traded.

c. the adoption of an existing technology by new firms

Technological advancement is NOT represented by which of the following? a. the invention of robotic meal preparation b. the creation of new apps designed to enhance efficiency and reduce waste in production lines c. the adoption of an existing technology by new firms d. the invention of the lightbulb

4.22%

The table shows consumer price index data for the USA. Based on this information, what is the rate of inflation in 1991?

1,194.3

The table shows statistics for three Canadian cities at several different points in time. What was the number of people in Vancouver's labor force in January 2005?

a. The average cost must be greater than the marginal cost Q*

Three things are required for long run equilibrium in a perfectly competitive market. OF the four sentences below, identify the one that is NOT required for long run equilibrium. a. The average cost must be greater than the marginal cost Q* b. Perfectly competitive firms must be profit maximizing by producing the quantity where MC=MR c. Firms must be making a $0 economic profit d. The market must be in equilibrium where Qd=Qs

none

Use the figure to determine which of the following statements are FALSE. i. Point B represents a productively efficient combination of Good X and Good Y ii. Point A represents an inefficient combination of Good X and Good Y iii. Points A and B are possible combinations of Good X and Good Y iv. Point C is not an attainable combination of Good X and Good Y given the resources represent in the model.

c. 80,000; the quantity of bananas sellers will increase, ceteris paribus

Use the graph to fill in the blanks. If the price of bananas is $10 a pound, ______ is the closest to the number of pounds that suppliers will supply. If the price of bananas is $14, we know ______. due to the law of supply. a. 40,000; the quantity of bananas sellers will supply will increase b. 60,000; the supply will shift out showing an increase in supply c. 80,000; the quantity of bananas sellers will increase, ceteris paribus d. 80,000; the supply curve will shift out showing an increase in supply

demand curve C

Use the information in the table to answer the question. In the table, which demand curve has the greatest price elasticity of demand over the range of prices considered?

b. elastic

Use the midpoint formula to answer this question. When a good's [rice increase from $20 to $25 and its quantity demanded decreases from 100 to 75, the elasticity of demand for that good is: a. inelastic b. elastic c. unit elastic d. perfectly elastic

d. a monopolistically competitive market

Walgreens has a large aisle that displays many different types of candy. This observation indicates that the candy market is likely ______. a. a perfectly competitive market b. a monopoly c. an oligopoly d. a monopolistically competitive market

d. An increase in demand will bring a relatively large increase in price

What do we expect when a good has a relatively inelastic supply curve? a. An increase in supply brings on a small decrease in demand b. Consumers will be price sensitive c. An increase in price will decrease supply d. An increase in demand will bring a relatively large increase in price

16.8 billion

What is Uganda's real GDP if its nominal GDP is $27.5 billion, and the GDP deflator is 163.4?

b. to ensure maximum employment while maintaining stable prices

What is the federal reserve mandate? a. to ensure that interest rates remain low at all times b. to ensure maximum employment while maintaining stable prices c. to keep the actual real GDP above potential GDP d. to print as many dollars as possible without causing inflation

20; bigger

When a price ceiling of $4 is implemented... How many consumers would like to buy the good, but will not be able to? Is the consumer surplus bigger or smaller after the price ceiling is implemented?

d. increase the total revenue of the firm

When the demand for a good is inelastic, raising the price by 25% will... a. have no effect on the total revenue of the firm b. reduce the total revenue of the firm by more than 25% c. reduce the total revenue by an unknown amount d. increase the total revenue of the firm

d. Each tax hurts the apple grower equally

Which for of taxation hurts the apple farmer more: a $1 per bushel production tax or a $1 per bushel consumption tax? a. The producer tax hurts the grower more b. Neither tax hurts the grower c. The consumption tax hurts the grower more d. Each tax hurts the apple grower equally

i, ii, and iii

Which of the following characteristics describes a perfectly competitive industry? i. Firms sell identical products ii. Firms are price takers iii. Firms are expected to ear $0 economic profit in the long run iv. consumers don't have a choice of which firm to buy from

a. an increase in the price of a substitute good

Which of the following factors would cause the change in the figure? a. an increase in the price of a substitute good b. a decrease in people's willingness to pay for a good c. an increase in the price of a complement good d. an increase in income for an inferior good

a. An economy experiences inflation of more that 7,500% in one year

Which of the following is an example of hyperinflation? a. An economy experiences inflation of more that 7,500% in one year b. There is a deflation of 20% in an economy c. An economy experiences over 10% increase in the price level in one year d. An economy that has CPI that is over 200

d. You go to the soda machine and realize that a bottle of Fanta now costs 15 cents more

Which of the following scenarios shows evidence of inflation? a. Your favorite bakery has changed ownership, and the cakes now seem to be a lower quality b. Your friend lends your $1,000 and asks for 2% interest c. You visit the local grocery store and see your favorite chips are on sale for today only d. You go to the soda machine and realize that a bottle of Fanta now costs 15 cents more

I, II, and III

Which of the following statements are True? A tax and subsidy are similar in that: I. they both create dead weight loss II. the burden of the tax and benefit of a subsidy depend on relative elasticity of demand and supply III. they both change the equilibrium level of output

c. an increase in female employment in an economy

Which of the following would lead to an increase in economic growth? a. an increase in dependency ratio b. an increase in the rate of inflation c. an increase in female employment in an economy d. a decrease in human capital

i, ii, and iii

Which people are not counted as part of the official measure of the labor force in the US? i. individuals under the age of 16 ii. retirees iii. institutionalized people iv. those who are not working but getting job training while they look for a job

d. Normal economic profit equals $0

Which sentence below is TRUE? a. Average total cost equals average revenue minus price b. Profit per unit equals price minus average variable cost c. Firms will enter and leave a perfectly competitive industry even when long run equilibrium exists d. Normal economic profit equals $0

b. Private property rights create incentives for people and businesses in an economy

Which statement below is TRUE regarding institutions and long run growth according to economic theory? a. Public property rights protect the fairness of income distribution b. Private property rights create incentives for people and businesses in an economy c. Enforceable contracts are not important because people cheat anyways d. Institutions have done nothing to do with economic growth because GDP measures production

i and ii

Which statement is TRUE? i. A monopoly will produce and sell fewer units than a perfectly competitive market ii. A monopoly will charge a higher price than the perfectly competitive market

i and ii

Which statement listed below is TRUE? i. A price ceiling below equilibrium always reduces producer surplus ii. A price floor above equilibrium always reduces consumer surplus iii. A subsidy does NOT cause dead weight loss because it results in more trade the Q*, not less trades

d. Keele who lost her job after her company lost a lot of costumers during an economic downturn

You have four friends. Which of your friends can be best describes as "cyclically unemployed"? a. Martha who is a full time say at home parent b. Regan who is in a nursing home c. Arthur who quit his job to look for a better job d. Keele who lost her job after her company lost a lot of costumers during an economic downturn

$6,300

You own and run a bakery. Last month, you purchase $760 worth of flour, eggs, butter, chocolate, and frosting. Using these inputs, you sold 12 large wedding cakes for an average of $525. How much did GDP rise?

$38,000

You purchase a new car for $38,000. After six months, you sell the car for 31,500. How much does GDP rise because of these two transactions?