Econ 102
A Pigouvian subsidy leads to a socially efficient outcome by _____. a) raising individuals' marginal benefit from consumption b) lowering individuals' marginal benefit from consumption c) lowering firms' marginal external cost of production d) lowering firms' marginal private cost of production
A
A change in the quantity demanded of a good is _____ a) represented by a movement along a demand curve b) represented by a shift of a demand curve c) the outcome of a change in consumer income d) the outcome of a change in tastes and preferences
A
A vaccination against a disease helps prevent the spread of the disease. Which of the following can help increase the number of people vaccinated to the socially optimal level? a) a corrective subsidy b) a health tax c) an insurance policy d) an income tax
A
An increase in the demand for a good is represented by ______. a) a rightward shift of a demand curve b) a leftward movement along a demand curve c) a rightward movement along a demand curve d) a leftward shift of a demand curve
A
Approximately how long did it take for new firms to enter? a) a month b) a day c) a week d) a year
A
Assume that a worker in a technology firm can produce 3 circuit boards in an hour. Due to subsequent innovation, she is not able to produce 6 circuit boards per hour. Other things remaining the same, the firm's supply curve is likely to ______ a) shift to the right b) shift to the left c) become steeper d) remain unchanged
A
At all points above the midpoint of a downward-sloping, linear demand curve fora. good, the value of the price elasticity of demand for the good is ____ a) greater than one b) equal to zero c) equal to one d) less than one, but greater than zero
A
Empiricism refers to the process of ______. a) testing ideas using data b) measuring variables c) making choices using values and beliefs d) collecting and organizing data
A
If the net benefit of Project A is $5 and that of Project B is $8, switching from Project A to Project B _____ a) increases the net benefit by $3 b) increases the net benefit by $8 c) decreases the net benefit by $8 d) reduces the net benefit by $3
A
Increases in the marginal product of labor can be attributed to ____ a) the specialization of workers b) better use of work space c) the depreciation of capital d) diminishing returns to workers
A
Net benefits of an alternative equal _____ a) benefits minus costs b) benefits divided by costs c) the product of benefits and costs d) the sum of benefits and costs
A
Overfishing leading to a rapid depletion of the stock of fish is an example of ________. a) tragedy of the commons b) paradox of thrift c) free-rider problem d) prisoners' dilemma
A
Pigou's work was said to be inspired by pollution in which city? a) London b) New York c) Beijing d) Paris
A
Producer surplus for a perfectly competitive firm is_____. a) the area under the market price and above the firm's marginal cost curve b) always zero c) the same as profit d) the area under firm's total cost curve and above marginal cost
A
Scenario: Jack takes 3 hours to complete a painting and 6 hours to create a sculpture. He has 30 hours of time to spend on both activities.Refer to the scenario above. Which of the following combinations will lie above Jack's production possibilities curve? a) 3 paintings and 5 sculptures b) 5 sculptures only c) 10 paintings only d) 2 paintings and 3 sculptures
A
The demand curve for most goods is normally _____ a) downward sloping b) upward sloping c) parallel to the x-axis d) parallel to the y-axis
A
The price elasticity of supply is the ____ a) percentage change in price due to a percentage change in quantity supplied b) percentage change in price due to a change in quantity supplied c) price associated with a particular quantity supplied d) change in price due to a change in quantity supplied
A
The reservation value of a buyer reflects her ______ a) willingness to pay for a good or service b) total utility from a good or service c) trade-off between buying various goods and services d) total income
A
The shift toward more open, integrated economies that participate in foreign trade and investment is referred to as _____. a) globalization b) protectionism c) fair trade promotion d) traditionalism
A
The techniques of optimization using total value and optimization using marginal analysis ______ a) provide identical answers when comparing the same set of alternatives b) cannot be used to compare the same set of alternatives c) may provide different answers when comparing the same set of alternatives d) compare only the costs and ignore the benefits of the alternatives
A
The total surplus in a market is represented by the area between the _____ a) demand and supply curves and the price axis b) demand curve and the market price line c) demand curve and the horizontal axis d) supply curve and the market price line
A
Using higher tolls during peak travel times in cities and peak fees for airplane takeoff and landing slots is an example of _____. a) congestion pricing b) positive externality c) carbon tax d) social welfare
A
What did the producers of the podcast A/B test? a) the introduction to the podcast b) the ending of the podcast c) the title of the podcast
A
When two variables move in opposite directions, they are said to be _____ a) negatively correlated b) equivalent c) positively correlated d) uncorrelated
A
Which best describes what Ashley Langer said about gas versus miles taxes? a) both have exactly the same effect on externalities but miles taxes affect rural drivers less b) both have exactly the same effect on externalities but gas taxes affect rural drivers less c) rural drivers were not affected by these taxes d) urban drivers were not affected by these taxes
A
Which of the costs below is an example of a fixed cost in the short run? a) a 3-year lease on retail space at the local mall for a clothing retailer b) the wages paid to workers at a landscaping firm c) fuel costs to a taxicab service d) the cost of paper to a copy shop
A
Which of the following activities is most likely to give rise to a positive externality? a) getting a flu vaccination b) jogging every morning c) consuming organic products d) buying a pair of gloves
A
Which of the following is true? a) the market demand curve for a public good is obtained by the vertical summation of individual demand curves b) the market demand curve for a private good has a positive slope c) the market demand curve for a public good is always perfectly elastic d) the market demand curve for a public good is obtained by the horizontal summation of individual demand curves
A
Which of the following occurs when an externality is internalized? a) an increase in social well-being b) an increase in private benefit c) an increase in returns to scale d) an increase in deadweight loss
A
Which of the following pairs of variables is likely to be positively correlated? a) income and consumption b) education and unemployment c) availability of health care and death rate d) price and consumption
A
Which of the following will lead to a change in the opportunity cost of buying a pen in terms of a pencil? a) a twofold increase in the price of pens and a threefold increase in the price of pencils b) a decrease in the consumer's income c) a twofold increase in the prices of both pens and pencils d) an increase in the consumer's income
A
______ occur when average total cost falls as the quantity produced increases a) economies of scale b) diseconomies of scale c) increasing marginal returns d) decreasing marginal returns
A
How can we best describe the type of economic study that the A/B podcast coauthors conducted? a) a lab experiment b) a natural experiment c) a controlled experiment d) correlation but not causation
B
If new firms enter an existing market, _____ a) the profits of all firms are likely to increase b) the market price is likely to fall c) the market demand is likely to increase d) the market supply is likely to fall
B
In a perfectly competitive market, sellers _____ a) coordinate to set the market price b) are price takers c) each have the power to set the price d) are told the price to charge by the government
B
In the interview, we discussed a regulation on payday lenders. Where was this regulation passed? a) Arizona b) Ohio c) California d) Nevada
B
In the long run, a firm should exit from a market when _____ a) price is equal to average total cost b) price is less than average total cost c) price is equal to marginal cost d) price is more than marginal cost
B
Price elasticity of demand measures ______ a) the change in demand due to a change in the good's own price b) the percentage change in quantity demanded due to a percentage change in the good's own price c) the slope of the demand function d) the change in quantity demanded to a change in the good's own price
B
Producer surplus is the _____. a) product of a seller's reservation value and the price he finally receives b) difference between a seller's reservation value and the price he finally receives c) ratio of a seller's reservation value to the price he finally receives d) sum of a seller's reservation value and the price he finally receives
B
Scenario: Jack takes 3 hours to complete a painting and 6 hours to create a sculpture. He has 30 hours of time to spend on both activities.Refer to the scenario above. Which of the following combinations will lie below Jack's production possibilities curve? a) 10 paintings and 6 sculptures b) 5 paintings and 1 sculpture c) 10 paintings only d) 10 sculptures only
B
According to the interview with Doug Webber, what was closest to the average net amount that a student at a school like UNR spends on tuition these days (after financial aid)? a) $1000 b) $3000 c) $500 d) $25000
B
Among a set of alternatives with the same benefits, an individual is said to optimize if she chooses an alternative that ____ a) has the highest indirect cost b) has the lowest total cost c) has the lowest opportunity cost d) has the highest total cost
B
An omitted variable is a variable that _____ a) does not cause other variables in a study to change when it changes b) has been left out, and if included, would explain why the variables considered in a study are correlated c) is removed from a study as it can lead to the problem of reverse causality d) is purposely left out as it does not aid an economic analysis
B
By approximately how much did the price of solar panels decrease between 2007 (8 years before the original airing of the podcast) and 2015 (at the time of the original podcast) a) 25 b) 75 c) 0 d) 50
B
Causation occurs when _____ a) a change in one variable does not cause any change in another variable b) a change in one variable is the reason for a change in another variable c) two variables tend to move in the same direction d) two variables tend to move in opposite directions
B
A firm should shut down in the short run if the price of a good is less than its _____ a) marginal cost b) average variable cost c) average fixed cost d) average total cost
B
A seller who is a price-taker charges ____ a) a price above the market price b) the market price c) different prices to different buyers d) a price below the market price
B
A supply curve shows the relationship between _____ a) output and revenue b) output and prices c) output and the total cost of production d) output and consumer income
B
Scenario: Ron plays loud music, which prevents his neighbor from studying. He knows that his neighbor values studying at $5,000, while the cost of soundproofing Ron's room is $3,000.Refer to the scenario above. If Ron has the right to listen to music at night, how much does his neighbor need to pay him to stop playing music? a) Any amount between $5,000 and $8,000 b) Any amount between $3,000 and $5,000 c) Any amount above $5,000 d) Any amount below $3,000
B
Suppose Z is a normal good. The equilibrium price and equilibrium quantity of Z in the year 2013 was $25 and 60 units, respectively. In 2017, the equilibrium price of Z had decreased to $15 and the equilibrium quantity had also decreased to 50 units. Other things remaining the same, which of the following could explain this change? a) a leftward shift of the supply curve of Z b) a leftward shift of the demand curve for Z c) a rightward shift of the demand curve for Z d) a rightward shift of the supply curve of Z
B
The consultant ended up changing the seats in one area from 8 to 7. She and the owner then focused on how much revenue would changed with this different number of seats. This can be seen as an example of what? a) analysis of large changes b) marginal analysis c) optimization with total value
B
The percentage change in the quantity demanded of a good due to a percentage change in its price is referred to as _____ a) the income elasticity of demand b) the price elasticity of demand c) consumer surplus d) the cross-price elasticity of demand
B
The primary goal of a seller is to _____ a) minimize consumer surplus b) maximize profits c) minimize deadweight loss d) maximize opportunity cost
B
The slope of a production possibility curve represents _____. a) the total cost of producing a given level of output b) the opportunity cost of producing one more unit of a good in terms of the forgone production of the other good c) the rate at which people in an economy would like to trade one good for another d) combinations of two goods that are not attainable with existing technology
B
When a Pigouvian tax is imposed, _____. a) the marginal social cost curve shifts downward b) the marginal private cost curve shifts upward c) the demand curve shifts rightward d) the marginal social benefit curve shifts downward
B
Which idea did Lisa Cook say was the most useful idea in Economics? a) comparative advantage b) opportunity cost c) lump of labor d) thinking on the margin e) causal inference
B
Which of the following best describes equilibrium? a) a situation where economic agents do not optimize as they do not have perfect information b) a situation where no economic agent would benefit by changing his or her behavior c) a situation where only one individual or firm makes an optimal decision d) a situation where the government intervenes to allocate resources
B
Which of the following is a property of a good economic question? a) a good economic question always addresses topics that are important to the whole society and not to an individual economic agent b) a good economic question can be answered c) a good economic question should never incorporate elements from disciplines other than economics d) a good economic question should always have a single solution
B
Which of the following is a tool used for protectionism? a) open market operations b) Tariffs c) service tax d) bank rate
B
Which of the following is a topic studied by microeconomists? a) measures to combat inflation b) price determination by a firm c) national income calculations d) interest rate determination
B
Which of the following statements best captures the poll results that I posted in the chapter 8 review sheet: a) New US Steel Tariffs will increase welfare (total surplus) in the US b) New US Steel Tariffs will decrease welfare (total surplus) in the US c) New US Steel Tariffs will have no effect on welfare (total surplus) in the US
B
Which of the following statements best describes an inferior good? a) an inferior good is a good whose quantity supplied always exceeds its quantity demanded b) an inferior good is a good whose demand decreases with an increase in consumer's income c) an inferior good is a good that is sold at a subsidized price d) an inferior good is a good that is rationed by the government
B
Which of the following statements is true? a) command economies do a better job at maximizing social welfare in comparison to market economies b) central planners in command economies have to make decisions that prices would automatically have made in market economies c) bringing economic agents together to trade is easier in command economies than in market economies d) the incentive problem and the coordination problem lead to lower efficiency in market economies
B
Why was one of the food bank workers interested in bidding on syrup? a) he was anticipating the price of syrup going up b) he had a lot of pancake mix c) no answer text provided d) his food bank had a large increase in clients because of the recession
B
A good is non-rival in consumption if ________. a) the government can regulate its production b) the demand for the good increases with an increase in the consumer's income c) one person's use of the good does not preclude consumption by others d) people cannot be prevented from using it
C
A natural experiment is an empirical study _____ a) in which the researcher assigns subjects to the control and treatment groups to verify a cause-effect relationship b) in which the predictions of the model are not required to be tested with data c) in which some process, outside the control of the experimenter, has assigned subjects to the control and treatment groups in a random or nearly random way d) that can only be used to understand natural phenomena and is widely used in subjects such as physics and biology
C
A production possibilities curve shows the _______. a) relationship between the price of a good and its quantity supplied b) different combinations of two inputs used to produce a given quantity of output c) maximum production of one good for a given level of production of another good d) quantity of output produced and the amount of inputs required for the production of the output
C
A surplus occurs in a market when _____ a) the price lower than the equilibrium price b) demand exceeds supply c) the price is higher than the equilibrium price d) the marginal cost of production is negligible
C
An externality occurs when ____. a) the government regulates production and consumption decisions b) the quantity demanded of a good exceeds the quantity supplied c) an economic activity affects third parties not engaged in the activity d) the quantity supplied of a good exceeds the quantity demanded
C
Based on what Betsey Stevenson reported getting, what was the inflation adjusted amount the tooth fairy should give? a) about 5 dollars b) about 1 dollar c) about 3 dollars d) about 20 dollars
C
Economics is primarily the study of _____ a) the mental functions and behavior of individuals and groups b) the state, nation, government, and politics and policies of governments c) how agents choose to allocate scarce resources how these choices affect society d) the problems related to the existence and evolution of society
C
Firm A and Firm B produce the same goods but with different inputs. If the inputs used by Firm A are more easily available than the inputs used by Firm. B, then which of the following statements is true? a) the elasticity of Firm A and Firm B cannot be compared without information on price change b) the elasticity of supply of Firm A will be lower than the elasticity of supply of Firm B c) the elasticity of supply of Firm A will be higher than the elasticity of supply of Firm B d) the elasticity of supply of Firm A and Firm B will be equal
C
Optimization using total value calculates _____ a) the change in net benefits resulting from a shift from oe alternative to another b) only the costs of an alternative and not the benefits c) the total net benefits of different alternatives d) only the benefits of an alternative and not the costs
C
Other things remaining same, a leftward shift in the demand curve will lead to a(n)_____ a) decrease in the equilibrium price and an increase in the equilibrium quantity b) increase in the equilibrium price and the equilibrium quantity c) decrease in the equilibrium price and the equilibrium quantity d) increase in the equilibrium price and a decrease in the equilibrium quantity
C
Suppose a market has only one seller and only one buyer of a good. The buyer has a reservation value of $25 and the seller has a reservation value of $15. The market price of the good is determined to be $20. If they trade, the social surplus will be _____ a) $40 b) $20 c) $10 d) $60
C
The short-run supply curve of a competitive firm is the portion of ____ a) its marginal cost curve that lies below its average cost curve b) its average cost curve that lies above its marginal cost curve c) its marginal cost curve that lies above its average variable cost curve d) its average cost curve that lies below its marginal cost curve
C
What best describes what happened when the government started selling the stockpile helium at a fixed price? a) the price was lower than ATC for firms, drawing new firms into the market b) no answer text provided c) the price was lower than ATC, causing private helium producing firms to exit the market d) the price was too high and consumers could no longer afford helium
C
What describes what happened to payday lenders (in terms of chapter 6 vocabulary)? a) entry b) shutdown c) exit d) nothing
C
What did Iceland start trading in the 19th century? a) turnups b) oil c) fish d) potatoes
C
What is the result in the data about major choice in a recession? a) students chose lower paying majors b) students did not change their choices c) students tended to choose higher paying majors d) students were less likely to finish college
C
When the marginal cost curve lies below the average cost curve, _____ a) the marginal cost curve is horizontal b) the average cost curve slopes upward c) the average cost curve slopes downward d) the marginal cost curve is vertical
C
Which of the following occurs when an economic activity has a spillover benefit on third parties not engaged in the activity? a) a negative externality b) a gain in producer surplus c) a positive externality d) a gain in consumer surplus
C
Which of the following statements best captures the poll results that I posted in the chapter seven review sheet: a) A vast majority of economists believe that companies that try to maximize shareholder value have NO negative effects on workers and communities b) Many economists worry that companies that try to maximize shareholder value have negative effects on workers and communities, and a majority agree that moving to a model where companies were managed with keeping impacts on workers and communities more in mind would have NO negative effects on profits. c) Many economists worry that companies that try to maximize shareholder value have negative effects on workers and communities, but fewer agree that moving to a model where companies were managed with keeping impacts on workers and communities more in mind would have no negative effects on profits.
C
Which of the following statements correctly describes a perfectly competitive market? a) in a perfectly competitive market, individual sellers and buyers can influence the market price b) buyers in a perfectly competitive market pay different prices according to their individual demand c) all participants in a perfectly competitive market are price-takers d) haggling and bargaining is commonly observed in a perfectly competitive market
C
Which of the following statements is true? a) normative economic statements can be confirmed or disproven b) positive economics deals with issues that are subjective c) normative statements depend on personal references d) positive economics recommends what people ought to do
C
A chemical factory releases its by-products into a nearby river, which harms aquatic flora and fauna. This is an example of a ________. a) free-rider problem b) positive externality c) pecuniary externality d) negative externality
D
A green pasture has turned barren due to overgrazing. This happened because the pasture was ________. a) excludable but non-rival b) non-excludable and non-rival c) excludable and rival d) non-excludable but rival
D
A street light is a _____ a) common pool resource good b) private good c) club good d) public good
D
At the competitive equilibrium, the ____ a) quantity supplied exceeds the quantity demanded of a good b) demand curve is tangential to the supply curve c) quantity demanded exceeds the quantity supplied of a good d) quantity demanded is equal to the quantity supplied of a good
D
Economic models are often based on assumptions because they _____ a) help explain the past b) help predict the future with greater accuracy c) help test models even when relevant data are unavailable d) help simplify complex real-world phenomena
D
Efficiency is achieved in competitive markets because ____. a) deadweight loss is maximized b) consumer surplus is maximized c) producer surplus is maximized d) social surplus is maximized (the economic pie is made as large as possible)
D
Firms in a perfectly competitive industry earn zero profits in the long run because ______ a) costs increase b) the government sets prices c) demand decreases d) the absence of barriers to entry enables free entry and exit
D
For an individual, consumer surplus measures _____ a) willingness to pay b) the price paid for the good c) willingness to pay plus the price paid for the good d) willingness to pay less the price paid for the good
D
If a buyer's reservation value for a good is $15 and the price at which he purchases the good is $8, his consumer surplus is _____ a) $1.8 b) -$7 c) $120 d) $7
D
In the long run, _______ a) all factors of production are fixed b) all firms earn positive economic profits c) only some inputs of a firm can be changed d) all factors of production can be changed
D
Nelson described Economics as being a social science because it is based off of a) hard science b) money c) numbers d) human behavior
D
Points on a production possibilities curve are ____ and ____. a) inefficient; attainable b) efficient; unattainable c) inefficient; unattainable d) efficient; attaiable
D
Private goods are ______. a) excludable but non-rival in consumption b) non-excludable and non-rival in consumption c) non-excludable but rival in consumption d) excludable and rival in consumption
D
Private solutions to externalities are most effective if _____. a) a large number of people affected by the externalities b) the transaction costs associated with bargaining are high c) property rights are not defined clearly d) the transaction costs associated with bargaining are low
D
Scenario: Yasmin and Zeek are lawyers working at V, W, and X LLP. Yasmin works 48 hours a week, and Zeek also works 48 hours a week. They handle two types of cases, intellectual property (IP) cases and corporate fraud (CF) cases. It takes Yasmin 6 hours to handle each IP case and 4 hours to handle each CF case. Zeek can finish an IP case in 3 hours and a CF case in 6 hours. Refer to the scenario above. Suppose that the two lawyers' boss wants the total number of IP cases worked on by them to equal the total number of CF cases worked on by them. So long as the total number of IP cases equals the total number of CF cases, their boss does not care which lawyer works on how many of which type of case. So Yasmin and Zeek decide to take advantage of their comparative advantages. How would they divide the tasks? a) Yasmin specializes in CF cases, while Zeek specializes in IP cases b) Yasmin specializes in IP cases, while Zeek works on both types of cases c) Yasmin specializes in IP cases, while Zeek specializes in CF cases d) Yasmin specializes in CF cases, while Zeek works on both types of cases
D
The demand schedule for a commodity illustrates how the consumption of a commodity changes with changes in _____ a) supply b) income c) tastes and preferences d) its price
D
The entry and exit of firms in a perfectly competitive market is mostly dependent on _____ a) the number of consumers in the market b) the number of firms in the market c) government regulations d) the profitability of the existing firms
D
The free-rider problem exists for goods that are _____. a) free b) rival c) excludable d) non-excludable
D
The invisible hand is mostly guided by ______ a) government intervention b) the quantity of goods and services sold c) the costs of production d) market prices
D
Which of the following correctly identifies an argument against globalization? a) globalization leads to an exploitation of developed countries b) globalization works against free trade c) globalization limits the bundle of goods and services available in smaller countries d) globalization can lead to a loss of indigenous culture and tradition
D
Which of the following goods is likely to have an income elasticity of demand greater than one? a) gasoline b) bread c) salt d) diamond jewelry
D
Which of the following is an example of a public good? a) a magazine subscription b) a house in a tourist destination c) a training program for a company's employees d) a radio broadcast
D
Which of the following statements is true? a) An economic agent can have a comparative advantage in the production of all goods. b) The agent with the higher opportunity cost of producing a good has the comparative advantage in producing that good. c) An economic agent who has the absolute advantage in producing a good also has the comparative advantage in producing that good. d) There are mutually beneficial gains from trade if opportunity costs differ.
D
_____ relates to the distribution of resources across society a) social surplus b) utility c) efficiency d) equity
D
