Microeconomics E1 set

Complete the market and supply blanks in the table above. Based upon your answers, the equilibrium price would be

$2

If pizzas were free, your consumer surplus would be:

$50

If pizzas are $6 each, your consumer surplus is:

$8

Referring to the above graph, starting at point A, the opportunity cost of producing each successive unit of tractors is

2, 4, 6, and 8 units of bread

In the exhibit, more time spent studying economics adds points to economics scores but subtracts points from accounting scores. The student in this example would maximize net benefits by studying economics for _______ hours.

4

If the economy is producing at alternative X, the opportunity cost to it of producing at Y instead of X is _______ units of consumer goods per period.

6

Use the following to answer the question below. a) those that are willing and able to pay the price b) declining industries c) products that consumers most want d) normal profit e) at maximum or productive efficiency For whom are products produced?

A

Which points on the above graph indicates resources are being wasted?

A

Producing at any point on the PPC/PPF means a) all resources and technology available are fully utilized (full employment) b) all resources and technology used are producing to their maximum extent (full production

A and B

Which of the following is an example of capital?

A gravel truck

Using the graph below, use the production possibilities curve/frontier PP1 curve to answer the question following the graph. Which point(s) on the above graph relative to PP1 curve, represent(s) maximum possible output and therefore productive technical efficiency?

A, B, C

Use the following to answer the question below. a) those that are willing and able to pay the price b) declining industries c) products that consumers most want d) normal profit e) at maximum or productive efficiency "What" products should be produced?

C

Movement along a line on a graph occurs when a change in the dependent variable on the graph is caused by

Changes in the independent variable "only" because all outside variables are assumed constant or ceteris paribus.

Which point of production on the above graph is not achievable with available resources and technology?

D

Use the following to answer the question below. a) those that are willing and able to pay the price b) declining industries c) products that consumers most want d) normal profit e) at maximum or productive efficiency How are products to be produced?

E

A current price below the equilibrium price will result in a surplus.

False

If a decrease in the price of a good causes an increase in total revenue, the demand for the good is price inelastic.

False

If a demand curve has a constant slope, price elasticity will also be constant.

False

If one event follows another, the first event must have caused the first event.

False

Money is considered to be a factor of production.

False

Normative statements are statements of facts.

False

The scientific method is not used in economics.

False

The total benefit of consuming OE units is given by the area:

OCDE

The exhibit shows how supply and demand might shift in response to specific events. Suppose a fall frost destroys one-third of the nation's orange crop. Which panel best describes how this will affect the market for oranges?

Panel (b)

The exhibit shows how supply and demand might shift in response to specific events. Suppose a drought destroys one-third of the nation's peanut crop. Which panel best describes how this will affect the market for peanuts?

Panel (c)

A decrease in the price of a factor of production will lead to an increase in the supply of goods that use the factor in production.

True

An important determinant of elasticity is the availability of substitutes.

True

Analyzing the cost and benefits of "each or the next" choice is an example of the marginal approach in economics

True

Choices should be made that provide the greatest "net benefits"

True

Economic policy involves facts and judgments.

True

If the U.S. economy adds to the capital stock, this may require a temporary decrease in the amount of present consumption.

True

Net benefits equal total benefits minus total costs.

True

Price elasticity of demand is the responsiveness of quantity demanded to changes in price.

True

The present position of a nation on its production possibilities curve will influence the future position of the production possibilities curve.

True

The difference between iron ore deposits and the steel produced from these deposits that is later used to make factory equipment illustrates the difference between:

a natural resource and capital.

A price floor would occur on the above graph a price of

a) $40

Suppose the price elasticity coefficients of demand are 1.43, 0.67, 1.11, and 0.29 for products W, X, Y, and Z respectively. At 1% decrease in the price of each product will increase total revenue in the case(s) of products.

a) W and Y

Which of the above graphs would apply when a rise in the price of manufacturing machinery occurs for a manufacturing firm?

a) a.

Complete the market and supply blanks in the table above. Based upon your answers, if the current price was $2, the market would

a) be in equilibrium

A decrease in buyers' income, ceteris paribus, for the purchase of a normal good will shift the ______ on the above graph.

a) demand curve to the left

Economist Adam Smith

a) felt markets would self correct un employment without government intervention

Compared to production alternative D in the above table, the choice of alternative production C would

a) increase future economic growth

The changes in Y from 70 to 80 on the above graph is known as

a) movement along a line

Which point(s) on the above PPC/PPF will lead to greater future production possibilities, i.e. economic growth represented by an outward shift in the future PPC/PPF?

a) point A

A decrease in supply (shift to the left) on the above graph, will cause market equilibrium price to

a) rise and quantity to fall

Using the graph below, answer the question following the graph. For PP1 on the above graph, an improvement in technology will

a) shift the production possibilities curve/frontier PP1 to PP2 or PP3

Which of the following is considered an economic activity?

all of the above

Given that meat and potatoes are complementary goods, if the price of meat decreases substantially, there would be:

an increase in the demand for potatoes (shift) (movement along).

An increase in demand, with no change in supply, will lead to ________ in equilibrium quantity and ________ in equilibrium price.

an increase; an increase

Using the above production possibilities table and assuming the economy is producing at production alternative C, the opportunity cost of producing three more units of consumer goods is a) 2 units of capital goods (wrong) b) 1/3 unit of capital goods c) 1 unit of capital goods d) 1/2 unit of capital goods

b) 1/3 unit of capital goods?

Complete the market and supply blanks in the table above. Based upon your answers, the equilibrium market quantity would be

b) 15 units

According to the above demand schedule for automobiles, the price elasticity of demand is

b) 9.5 and total revenue will increase if price decreases

Assuming ceteris paribus applies to the above graph, what causes the change in Y from 70 to 80?

b) a change in variable X only, the independent variable

Complete the market and supply blanks in the table above. Based upon your answers, if the government set by law that no price less than $3 could be charged

b) a price floor would exist

Refer to the above table. Suppose the demand schedule is represented by columns (2) and (3) and the supply schedule by columns (3) and (5). If the price artificially set at $9

b) a surplus of 20 units would exist

In simple two sector flow, the sector(s) that is (are) composed of buyers in the resource or factor market is (are)

b) business sector

Using the above graph, changes in variable Y while "moving along line" A or B are caused by

b) changes in variable X "only" because all outside variables are assumed constant or ceteris paribus

A price increase in the price elastic range of demand curve will _____ a firm's total revenue.

b) decrease

An increase in the quantity sold of a product that is a complement to the product in the above graph will shift the graph's product _______

b) demand curve to the right

Products include _____ and _____

b) goods and services

Division of labor specialization

b) increases output without the need for additional resources

Using the above table, for the economy to produce a total of 3 units of capital goods and 13 units of consumer goods, it must a) use the available resources and technology more efficiently b) obtain additional resources and/or gain higher level of technology c) reach above employment d) none of the above (wrong)

b) obtain additional resources and/or gain higher level of technology

A "shift" in the demand or supply of a product is caused by a change in a) the price of the product b) outside variables which are non-product price determinants of demand or supply c) A and B (wrong) d) none of the above

b) outside variables which are non-product price determinants of demand or supply??

Using the above graph, at a price of $20, ceteris paribus, pressure in the market is for

b) price to rise and quantity supplied to rise

_______ are intangible products

b) services

At what price(s) on the above graph would a surplus exist?

c) $40 and $50

A shortage of product in the above market exists at a price of a) $10 b) $30 c) $40 d) none of the above (wrong)

c) $40??

Refer to the above table. If the demand schedule is represented by columns (2) and (3) and the supply schedule by columns (3) and (5), equilibrium price and quantity will be

c) $8 and 60 units

The ______ of economic resources limits the amount of products that can produced. a) availability b) scarcity c) both of the above

c) both of the above

Based upon the above graphs, which one would show the effect on product A of a price increase of a substitute product for product A? a) a b) b c) c d) d (wrong)

c) c???

Referencing the above graph, the relationship between variables X and Y for lines A and B is a) zero (wrong) b) inverse or negative c) direct or positive d) infinite

c) direct or positive??

______ are needed to produce products

c) economic resources

Tangible products are called

c) goods

Based upon the table above, a total output of 3 units of capital and 4 units of consumer goods

c) is an inefficient use of available resources and technology

Based upon a simple two sector circular flow diagram, the fundamental market(s) in an economy are

c) product and resource (factor)

Using the above graph, an increase in demand (shift to the right), will cause equilibrium price to

c) rise and quantity to rise

Demand and supply schedules (tables) and lines/curves

c) show the amount of products buyers and sellers are willing and able to buy/sell at various possible prices, ceteris paribus

Economics is a _______ science because it studies the behavior of people.

c) social

An increase in technology will shift the ______ on the above graph

c) supply curve to the right

A transferable property right is one that:

can be sold or leased to someone else.

A price ceiling on the above graph of supply and demand would occur at a price

d) $20

What is the coefficient of price elasticity of demand for the above demand schedules?

d) 1.42

In the $40 to $20 price range in the above graph, the value of the price elasticity of demand is closest to a) 0.20 (wrong) b) 0.40 c) 1.2 d) 4.2

d) 4.2??

Which of the following is (are) true for the coefficient of price elasticity of demand? a) 1.75 value indicates an elastic range of demand b) 3.25 value indicates an inelastic change in demand c) .75 value indicates change in demand d) A and C

d) A and C

Which point(s) indicate(s) maximum possible production output known as productive or technical efficiency?

d) B and C

Production of capital a) is referred to as roundabout production b) can result in economic growth c) results in sacrifice of consumer goods today d) all of the above

d) all of the above

The assumption(s) underlying simple two sector circular flow is (are)

d) all of the above

The market economic system is

d) all of the above

Which of the following is a microeconomic statement?

d) auto sales in Texas are up this year by 10%

The effect on an inferior good with a decrease in income is shown by which of the above graphs? a) a b) b c) c (wrong) d) d

d) d??

Production, distribution, and consumption of products are the three categories of ______ that people conduct.

d) economic activities

Industries that are expanding do so because

d) economic profits are being earned in the industry

Complete the market and supply blanks in the table above. Based upon your answers, if the current price is $4, the market would

d) experience a surplus of 28 units

Based upon the above graph, changes in variable Y due to a shift from line A to line B are caused by changes in a) one or more outside variables b) both variables X and outside variables c) variable X "only" because all outside variables are assumed constant or ceteris paribus (wrong) d) none of the above

d) none of the above?

Using the graph below, use the production possibilities curve/frontier PP1 curve to answer the question following the graph. Which point(s) relative to the PP1 curve on the above graph represent(s) the output combination consumers most desire and therefore represents allocative efficiency?

d) not determinable because consumer preferences are not included in the production possibilities model

A rightward shift (increase) in the supply curve in the above graph, will cause equilibrium

d) price to decrease and quantity to increase

An increase in worker wages (cost of labor) will shift the ______ on the above graph

d) supply curve to the left

A linear demand curve will have a price elasticity of demand whose absolute value:

decreases as price decreases.

When the percentage change in quantity demanded is less than the percentage change in price:

demand is inelastic

In calculating the price elasticity of demand, which of the following is (are) true? a) midpoint values are used in calculating the % changes in quantity and price (wrong) b) + and - signs are ignored in determining the coefficient of price elasticity c) price elasticity of demand does not change or vary along a demand curve d) A and B e) A and C

e) A and C??

If the United States decides to allocate more resources to capital goods and less to consumer goods, the United States will obtain a greater degree of:

economic growth.

If the price elasticity of demand is found to be 6, then demand is:

elastic

If the total revenue received by a firm decreases when it raises its price, this indicates that the demand for the firm's product is:

elastic

Variables that are correlated

follow a pattern which may or may not mean one causes the other to change.

When price goes down, the quantity demanded goes up. Price elasticity measures:

how responsive the quantity change is in relation to the price change.

Points A, B, E, and F:

indicate combinations of guns and butter that society can produce using all of its factors efficiently.

In a market capitalist economy:

individual ownership and decision making are relied upon.

A theory that is accepted as fact is called a

law

A simplified representation of a particular problem is a:

model

In economics the assumption is made that consumers and firms will make choices that maximize(s) the _______ of each activity.

net benefit

Scarcity in economics means:

not having sufficient resources to produce all the goods and services we want.

Which of the following is not true?

positive economic statements involve are opinions and value judgments

If a market reflects a shortage and prices are allowed to move:

price will increase.

The key signals that send messages to buyers and sellers to buy or not to buy or to sell or not to sell are, all other things unchanged:

prices

The difference between the total revenue received by sellers and their total cost is called _______ surplus, and for output level OE is depicted by the area enclosed in _______ .

producer; ABD

The difference between a firm's total revenue and its total economic cost is:

profit

Economists assume that firms seek to maximize:

profits

A price below the equilibrium price will:

result in pressure for price to rise.

A decrease in supply is caused by:

suppliers' expectations of higher prices in the future.

Whenever MB = MC, the decisionmaker should do _______ of the activity.

the same amount

Which of the following is not a factor in determining the price elasticity of demand?

the slope of the supply curve

A hypothesis that has been tested extensively without being rejected and has won widespread acceptance is a:

theory

If an economy is at point U, and its production possibilities curve is Curve 1, this would indicate that:

there is inefficiency and/or unemployment.

The observed correlation between baldness and heart disease demonstrates that:

there is probably some other factor that causes both baldness and heart disease.