MICRO EXAM #1

When a photographer decides to use a digital camera to take shots versus using film, the photographer is facing the: A. "how" tradeoff B. "for whom" tradeoff C. "what" tradeoff D. microeconomic question

A. "how" tradeoff

In the figure (see practice exam), what is the total consumer surplus from all the milk bought if the price of milk is $3 per gallon? A. $4 million B. $12 million C. $2 million D. $16 million

A. $4 million

The table above gives the demand schedule for snow peas. The price elasticity of demand between $4 & $5 per bushel is: A. 1.0 B. 2.0 C. 5.0 D. 2.6

A. 1.0

In the figure above (see practice exam), if Mac & Izzie both completely specialized & traded with one another, their joint output would be: A. 12 computers & 12 TVs per month B. 24 computers & 24 TVs per month C. 3 computers & 3 TVs per month D. 6 computers & 6 TVs per month

A. 12 computers & 12 TVs per month

According to the diagram (see practice exam), an allocatively efficient use of resources requires that production & consumption of gasoline be: A. 2 million gallons of gasoline per year B. 4 million gallons of gasoline per year C. 3 million gallons of gasoline per year D. 1 million gallons of gasoline per year

A. 2 million gallons of gasoline per year

The demand & supply curves for Green Tea are given by the following equations: Q = 50000 - 30P & Q = 25000 + 20P Where P is measured in dollars & Q is the number of t-shirts sold per year. The equilibrium quantity is _______ & the equilibrium is _______. A. 30000,500 B. 35,5 C. 50000,25000 D. 50,35

A. 30000,500

The demand & supply curves for Green Tea are given by the following equations: Q = 50,000 - 20P Q - 25,000 + 30P. Where P is measured in dollars & Q is the number of t-shirts sold per year. The equilibrium quantity is _______ & the equilibrium price is _______. A. 40000,500 B. 35,5 C. 50000,25000 D. 50,35

A. 40000,500

The demand & supply curves for t-shirts in Touristtown USA are given by the following equations. Q = 60-3P; Q = 30 +2P. Where P is measured in dollars & Q is the number of t-shirts sold per year. The equilibrium quantity is _______ and the equilibrium price is _______. A. 42,6 B. 6,22 C. 0,0 D. 44,12

A. 42,6

The figure above (see practice exam). Suppose a country is producing at point A. A movement to point _______ means that the country _______. A. D; must give up 20 million capital goods B. D; gives up 10 million consumer goods C. E; is easily accomplished D. B; is producing at an inefficient point

A. D; must give up 20 million capital goods

The price below the equilibrium price results in: A. a shortage B. a further price fall C. excess supply D. a surplus

A. a shortage

A person has a comparative advantage in producing a particular good if that person A. can produce it at lower opportunity cost than anyone else can B. has less desire to consume taht good than anyone else has C. has more human capital related to that good anyone else has D. has higher productivity in producing it than anyone else has

A. can produce it at lower opportunity cost than anyone else can

Allocating resources by the order of someone in authority is a _______ allocation method A. command B. majority rule C. market price D. first-come, first-served

A. command

(using same figures) which shows the effect of a new government program that provides each public school child with an orange to start the day? A. figure a B. figure d C. figures a & c D. figures a & d

A. figure a

The above figures (see practice exam) show the market for oranges. Which figure shows the effect of changing consumer preferences for more orange juice & less coffee in the morning? A. figure a B. figure b C. figure c D. figure d

A. figure a

A factor market is a market in which: A. households sell the services of the factors of production they control B. firms sell goods & services C. firms sell the services of the factors of production D. households buy goods & services

A. households sell the services of the factors of production they control

The demand curve for a good shifts rightward if income _______ or if preferences _______. A. increases/rises B. increases/falls C. decreases/rises D. decreases/falls

A. increases/rises

If income elasticity of demand is less than zero, the good is: A. inferior B. a substitute C. normal D. a luxury good

A. inferior

If the income elasticity of demand for spaghetti is -1.3, then spaghetti: A. is an inferior good B. is income elastic C. has an elastic demand D. is a normal good

A. is an inferior good

Marginal benefit A. is the maximum amount a person is willing to pay for one more unit of a good B. is the same as the total benefit recieved from consuming a good C. increases as consumption increases D. is the difference between total benefit & total cost

A. is the maximum amount a person is willing to pay for one more unit of a good

Scarcity requires that people must: A. make choices B. compete C. trade D. cooperate

A. make choices

Studying the determination of prices in individual markets is primarily a concern of: A. microeconomics B. macroeconomics C. positive economics D. negative economics

A. microeconomics

The price of a pencil increases & people buy more pens. You infer that pens & pencils are _______. A. substitues B. inferior goods C. normal goods D. complements

A. substitues

The price of a tomato increases & people buy more lettuce. You infer that lettuce & tomatoes are _______. A. substitutes B. inferior goods C. normal goods D. complements

A. substitutes

The market demand curve for CDs is the _______ of all the individual demand curves for CDs. A. sum B. product C. division D. average

A. sum

Marginal cost is the opportunity cost A. that arises from producing one more unit of a good or service B. that your activity imposes on someone else C. of a good or service that exceeds its benefit D. of a good or service divided by the number of units produced

A. that arises from producing one more unit of a good or service

Marginal benefit typically A. remains constant as more is consumed B. decreases as more is consumed C. increases as marginal costs increase D. increases as more is consumed

A. the quantity demanded; income

The income elasticity of demand is the percentage change in _______ divided by the percentage change in _______. A. the quantity demanded; income B. the price; income C. income; the quantity demanded D. income; the price

A. the quantity demanded; income

The requirement that people in similar situations be treated similarly is called: A. the symmetry principle B. efficiency C. utilitarianism D. the big tradeoff

A. the symmetry principle

In economics, positive statements are about: A. the way things are B. the way things out to be C. microeconomics, not macroeconomics D. macroeconomics, not microeconomics

A. the way things are

The cross elasticity of demand between apples & oranges is defined as the: A. change in the quantity demanded divided by the change in the quantity of oranges demanded B. % change in the quantity of apples demanded divided by the % change in change in price of oranges C. % change in the quantity of apples demanded divided by the % change in the quantity of oranges demanded D. price elasticity demanded for apples divided by the price elasticity of demand for oranges

B. % change in the quantity of apples demanded divided by the % change in change in price of oranges

In the figure, if Maria & Anna both completely specialized & traded with one another, their joint output would be: A. 2 ties & 9 shirts B. 10 ties & 12 shirts C. 10 ties & 0 shirts D. 15 ties & 12 shirts

B. 10 ties & 12 shirts

The table (see practice exam) shows the marginal benefit & marginal cost schedules for sun screen & camel rides. The efficient number of camel rides is _______. A. 1 ride per day because the marginal benefit exceeds the marginal cost by as much as possible B. 4 rides per day C. 2 rides per day D. 6 rides per day because that is the maximum number of rides

B. 4 rides per day

When people's incomes increase, the demand for a good increases. The good is called: A. a complement B. a normal good C. an inferior good D. a substitute

B. a normal good

The law of demand implies that, other things remaining the same: A. as income increases, the quantity of cheeseburgers demanded will increase B. as the price of a cheeseburger rises, the quantity of cheeseburgers demand will decrease C. as the price of a cheeseburger rises, the quantity of cheeseburgers demanded will increase D. as the demand for cheeseburgers increases, the price of a cheeseburger will increase

B. as the price of a cheeseburger rises, the quantity of cheeseburgers demand will decrease

Among the sources of economic inefficiency are all of the following EXCEPT A. subsidies B. competition C. taxes D. external costs

B. competition

The deadweight loss from producing an inefficient amount is a loss to the A. consumers but a gain to the producers B. consumers & to the producers C. producers but a gain to the consumers D. none of the above

B. consumers & to the producers

In the figure (see practice exam). If Mary wants to move from point B to point C, she must: A. improve technology B. give up some of good Y in order to obtain more of good X C. increase the accumulation of capital D. give up some of good X in order to obtain more of good Y

B. give up some of good Y in order to obtain more of good X

A country that has an absolute advantage in producing all goods will usually _______. A. produce all goods at lowest opportunity cost B. have a comparative advantage in some goods but not all C. not gain from specialization & trade D. have a comparative advantage in all goods

B. have a comparative advantage in some goods but not all

When the opportunity cost of producing more of a good is increasing, the marginal cost of producing more of the good is: A. decreasing B. increasing C. constant D. more information is needed to answer the question

B. increasing

A good with a horizontal demand curve has a demand with A. varying elasticity B. infinite elasticity C. unit elasticity D. zero elasticity

B. infinite elasticity

Scarcity requires that people must: A. compete B. make choices C. trade D. cooperate

B. make choices

When Big Al makes the statement "The cost of living has increased 10% over the past 10 years" he is: A. making a normative statement B. making a positive statement C. facing the standard of living tradeoff D. testing an economic model

B. making a positive statement

The value of a good is equal to the: A. price you actually pay for it minus the maximum you are willing to pay for it B. maximum price you are willing to pay for it C. maximum you are willing to pay for it minus the price you actually pay for it D. price that you actually pay for it

B. maximum price you are willing to pay for it

The analysis of the behavior of individual decision-making units is the definition of: A. macroeconomics B. microeconomics C. positive economics D. normative economics

B. microeconomics

A person who has an absolute advantage will A. have a comparative advantage in everything B. not have a comparative advantage in everything C. not specialize D. not trade

B. not have a comparative advantage in everything

Ted can study for his economics exam or go to a concert. He decides to study for his economics exam instead of going to the concert. The concert he will miss is Ted's _______ of studying for the exam. A. implicit cost B. opportunity cost C. discretionary cost D. explicit cost

B. opportunity cost

The loss of the highest-valued alternative defines the concept of A. scarcity B. opportunity cost C. marginal benefit D. entrepreneurship

B. opportunity cost

The term used to emphasize that making choices in the face of scarcity involves a cost is A. substitution cost B. opportunity cost C. accounting cost D. utility cost

B. opportunity cost

The term used to emphasize that making choices in the face of scarcity involves a cost is: A. utility cost B. opportunity cost C. substitution effect D. accounting cost

B. opportunity cost

If the cross elasticity of demand for good x with respect to the price of good y is positive, then goods x & y are: A. normal goods B. substitutes C. complements D. inferior goods

B. substitutes

Consumer surplus is the _______. A. what consumers have left over after shopping B. value of the good minus its price summed over the quantity purchased C. the number of goods sold times the market price D. total price paid by consumers minus the total cost of producing the good

B. value of the good minus its price summed over the quantity purchased

In the figure (see practice exam), when the efficient quantity of gloves is produced, the producer surplus is: A. $15000 B. $3000 C. $22500 D. $45000

C. $22500

The table (see practice exam) gives some data on the supply of roses in a small town. When the price rises from $30 to $50, the elasticity of supply is _______. A. 1.25 B. 0.20 C. 0.80 D. 5.00

C. 0.80

In the above figure (see practice exam), at point A what is the opportunity cost of producing one more audio tape? A. 14 video tapes B. 2 video tapes C. 1 video tape D. there is no opportunity cost

C. 1 video tape

A fall in the price of lemons from $11 to $9 per bushel increases the quantity demanded from 35,000 to 45,000 bushels. The price elasticity of demand is A. 8 B. 1.20 C. 1.25 D. 0.80

C. 1.25

A rise in the price of cabbage from $14 to $18 per bushel increases the quantity supplied from 4000 to 6000. The elasticity of supply is A. 0.6 B. 0.8 C. 1.6 D. 1.0

C. 1.6

A positive statement is: A. about what ought to be B. not less than zero C. about what is D. one that doesn't use ceteris paribus

C. about what is

Marginal cost usually A. decreases as marginal benefits decrease B. remains constant as more is produced C. increases as more is produced D. decreases as more is produced

C. increases as more is produced

In the figure above (see practice exam), if 4 million computers are produced per year then the _______ should be produced to achieve efficient resource use. A. marginal cost of a computer exceeded the marginal benefit of a computer, so more computers B. marginal benefit of a computer exceeds the marginal cost of a computer, so fewer computers C. marginal cost of a computer exceeds the marginal benefit of a computer, so fewer computers D. marginal benefit of a computer exceeds the marginal cost of a computer, so more computers

C. marginal cost of a computer exceeds the marginal benefit of a computer, so fewer computers

In the figure above (see practice exam), if 4 million computers are produced per year then the _______ should be produced to achieve efficient resource use. A. marginal cost of a computer exceeds the marginal benefit of a computer, so more computers B. marginal benefit of a computer exceeds the marginal cost of a computer, so fewer computers C. marginal cost of a computer exceeds the marginal benefit of a computer, so fewer computers D. marginal benefit of a computer exceeds the marginal cost of a computer, so more computers

C. marginal cost of a computer exceeds the marginal benefit of a computer, so fewer computers

People must make choices because A. there are many goods available B. most people enjoy shopping C. of scarcity D. None of the above answers is correct

C. of scarcity

The PPF is the boundary between those combination of goods & services that can be A. produced & those that can be consumed B. consumed & those that cannot be produced C. produced & those that cannot be produced D. consumed domestically & those that cannot be consumed by foreigners

C. produced & those that cannot be produced

If the cross elasticity of demand between goods X & Y is positive between goods X & Z is negative, then X & Y are _______ & X & Z are _______. A. price inelastic; income elastic B. price inelastic; complements C. substitutes; complements D. complements; substitutes

C. substitutes; complements

The market demand curve is: A. used to derive individual demand curves B. obtained by summing each individual's marginal utility curve C. the sum of the quantity demanded by each individual at each price D. the same as the market's marginal utility curve

C. the sum of the quantity demanded by each individual at each price

The price of a good will fall if: A. the current price is less than the equilibrium price B. the quantity demanded exceeds the quantity supplied C. there is a surplus at the current price D. the price of a compliment in consumption falls

C. there is a surplus at the current price

The PPF is the boundary between: A. those combinations of goods/services that can be produced & those that can be consumed B. those wants that are limited & those that are unlimited C. those combinations of goods/services that can be produced & those that cannot D. those resources that are limited & those that are unlimited

C. those combinations of goods/services that can be produced & those that cannot

A nation produces at a point inside its PPF A. when it trades with other nations B. when its PPF is bowed out C. when it produces inefficiently D. never

C. when it produces inefficiently

A fall in the price of lemons from $10.50 to $9.50 per bushel increases the quantity demanded from 19,200 to 20,800 bushels. The price elasticity of demand is A. 8 B. 1.20 C. 1.25 D. 0.80

D. 0.80

The table above (see practice exam) gives the demand schedule for snow peas. The price elasticity of demand between $6 & $7 per bushel is: A. 1 B. 2 C. 5 D. 2.6

D. 2.6

In the figure (see practice exam), the marginal cost of the 5th computer is A. 35 TVs B. 0 TVs C. 4 TVs D. 20 TVs

D. 20 TVs

In the above figure (see practice exam), the dead weight loss is zero if output is: A. 0 units B. 30 units C. 10 units D. 20 units

D. 20 units

In the figure (look at practice exam), the marginal cost of the second computer is A. 30 TVs B. 0 TVs C 4 TVs D. 3 TVs

D. 3 TVs

Refer to the same figure. Production point _______ represents an _______ production point. A. C; unattainable B. B; unattainable C. E; inefficient D. C; inefficient

D. C; inefficient

In the figure above (see practice exam) a price of $35 per dozen would result in: A. upward pressure on prices B. a shortage C. equilibrium D. a surplus

D. a surplus

The above figure (see practice exam) represents the market for oil. Because of the development of a new deep sea drilling technology the: A. demand curve shifts from D1 to D2 & the supply curve shifts from S1 to S2 B. demand curve doesn't shift & the supply curve shifts from S2 to S1 C. demand curve shifts from D1 to D2 & the supply curve doesn't shift D. demand curve doesn't shift, & the supply curve shifts from S1 to S2

D. demand curve doesn't shift, & the supply curve shifts from S1 to S2

According to Utilitarian principles first discussed in the 19th century, fairness implies: A. equality of opportunity B. winner takes all C. maximizing consumption D. equality of outcome

D. equality of outcome

In the figure (see practice exam), which movement reflects an increase in demand? A. from point A to point C B. from point A to point E C. from point A to point B D. from point A to point D

D. from point A to point D

In the figure (see practice exam), which movement reflects an increase in demand? A. from point A to point C B. from point A to point E C. from point A to point B D. from point C to point A

D. from point C to point A

If a increase in the price of gasoline decreases the demand for large cars, then: A. gasoline is an inferior good B. large cars are an inferior good C. gasoline & large cars are substitutues in consumption D. gasoline & cars are compliments in comsumptions

D. gasoline & cars are compliments in comsumptions

Because of increasing marginal cost, most supply curves A. have a negative slope B. are horizontal C. are vertical D. have a positive slope

D. have a positive slope

Opportunity cost means the A. monetary costs of an activity B. accounting cost minus the marginal benefit C. accounting cost minus the marginal cost D. highest-valued alternative forgone

D. highest-valued alternative forgone

Opportunity cost is defined as the: A. cost of not doing all of the things you would like to do B. lowest-valued alternative given up C. total value of all the alternatives given up D. highest-valued alternative given up

D. highest-valued alternative given up

When resources are assigned to inappropriate tasks, that is, tasks for which they are not the best match, the result will be producing at a point A. where the slope of the PPF is 0 B. where the slope of the PPF is positive C. outside the PPF D. inside the PPF

D. inside the PPF

Scarcity is a situation in which: A. most people can get only bare necessities B. some people can get all they want & some cannot C. people can satisfy all their wants D. people cannot satisfy all their wants

D. people cannot satisfy all their wants

In the figure (see practice exam), point D is A. production efficient & point B is not production efficient B. less production efficient than point C C. not production efficient & point B is production efficient D. production efficient & point A is not production efficient

D. production efficient & point A is not production efficient

The rights of an owner to use & exchange property rights are: A. socialist rights B. money rights C. capitalist rights D. property rights

D. property rights

The social arrangements that govern the ownership, use, and disposal of property are referred to as: A. private enterprise B. capitalism C. the double coincidence of wants D. property rights

D. property rights

The figure above (see practice exam) shows Clara's demand for CDs. If the market price for a CD is $15, then Clara: A. receives no consumer surplus B. receives a consumer surplus of 40 C. receives a consumer surplus of 15 D. receives a consumer surplus of 45

D. receives a consumer surplus of 45

The figure above (look at practice exam) shows Clara's demand for CDs. If the market price for a CD is $10, then Clara A. receives no consumer surplus B. receives consumer surplus C. receives consumer surplus of 10 D. receives consumer surplus of 80

D. receives consumer surplus of 80

The fact that wants cannot be fully satisfied with available resources reflects the definition of A. for whom to produce B. the big tradeoff C. the what tradeoff D. scarcity

D. scarcity

Consumer surplus is the _______ summed over the quantity purchased. A. price paid for a good minus the opportunity cost of making it B. opportunity cost of making a good minus the price paid for it C. price paid for a good minus the value of the good D. value of a good minus the price paid for it

D. shift rightward in the supply curve

To say that "supply increases" for any reason, means there is a: A. movement leftward along a supply curve B. movement rightward along a supply curve C. shift leftward in the supply curve D. shift rightward in the supply curve

D. shift rightward in the supply curve

The supply curve slopes upward when graphed against _______, because of _______. A. income; decreasing marginal cost B. the price of a good; decreasing marginal cost C. income; increasing marginal cost D. the price of the good; increasing marginal cost

D. the price of the good; increasing marginal cost

The "law of demand" states that changes in A. demand are inversely related to changes in supply B. the quantity demanded C. demanded are related directly to changes in supply D. the quantity demanded of a good are inversely related to changes in its price

D. the quantity demanded of a good are inversely related to changes in its price

Marginal cost curves generally slope: A. upward because of decreasing opportunity cost B. downward because of increasing opportunity cost C. downward because of decreasing opportunity cost D. upward because of increasing opportunity cost

D. upward because of increasing opportunity cost

A good with a vertical demand curve has a demand with A. varying elasticity B. infinite elasticity C. unit elasticity D. zero elasticity

D. zero elasticity