Econ 222 Final exam study guide

33) Which of the following is an example of a positive statement?

"When the minimum wage is increased, unemployment is a predictable consequence."

44) Refer to table 23-10. What was this country's real GDP in 2016?

$10,950

16) Refer to figure 4-18. Equilibrium price and quantity are, respectively,

$25 and 400 units

25) Refer to table 23-6. In 2012, this country's nominal GDP was:

$690

28) Refer to table 23-6. In 2012, this country's real GDP was:

$690

42) Refer to table 23-3. What were Crete's net exports in 2010?

$88

30) Refer to figure 2-1. Raymond buys a refrigerator for his new home. To which of the arrows does this transaction directly contribute?

A and B

40) Refer to figure 23-1. Which of the following correctly identifies the flow of dollars?

A, L, N, and B

18) Refer to figure 5-2. As price falls from Pa to Pb, which demand curve represents the *most elastic* (flattest) demand?

D1

35) Refer to figure 5-19. Which of the following statements is correct?

Supply curve D is more elastic than Supply curve C

43) Suppose an economy's production consists of corn and soybeans. In 2010, 20 bushels of corn are sold at $4 per bushel and 10 bushels of soybeans are sold at $2 per bushel. In 2009, the price of corn was $2 per bushel and the price of soybeans was $1 per bushel. Using 2009 as the base year, it follows that, for 2010,

nominal GDP is $100, real GDP is $50, and the GDP deflator is 200

14) Refer to table 4-11. If the price were $4, a:

shortage of 25 units would exist, and price would tend to rise

38) Refer to figure 4-22. At a price of $12, there is a:

shortage of 4 units

15) Refer to figure 4-21. At a price of $12, there is a:

surplus of 1 unit

41) Fine Edge manufactures lawnmowers. In 2014, it had $2 million worth of lawnmowers in inventory. In 2015 it sold $10 million worth of lawnmowers to consumers and had $1 million worth of lawnmowers in inventory. How much did the lawnmowers produced by Fine Edge add to GDP in 2015?

$9 million

17) If a 20% increase in price for a good results in a 15% decrease in quantity demanded, the price elasticity of demand is:

%change in qD/%change in P 15%/20% = 0.75 (inelastic bc <1)

47) In one day Alpha Cabinet Company made 40 cabinets with 320 hours of labor. What was Alpha Cabinet Company's productivity?

1/8 cabinet per hour

32) Refer to table 2-5. Table 2-5 shows one set of production possibilities. Which of the following combinations of corn and wheat is not currently attainable but would be attainable if there was an improvement in overall production technology?

1000 bushels of corn and 2000 bushels of wheat

13) Refer to figure 4-13. If Producer A and Producer B are the only producers in the market, then the market quantity supplied when the price is $6 is:

18 units

46) In 2010, the imaginary nation of Bovina had a population of 5000 and real GDP of 600,000. In 2011 it had a population of 5200 and real GDP of 636,480. During 2011 real GDP per person in Bovina grew by:

2 percent, which is about the same as average U.S. growth over the last one hundred years

2) Refer to Table 2-4. What is the opportunity cost to Picnicland of increasing the production of hotdogs from 450 to 900?

225 burgers

10) Refer to table 4-3. If these are Bert, Ernie, and Oscar in the market, then the market quantity demanded at a price of $1 is:

29 units

8) Refer to figure 3-19. Chile's opportunity cost of one pound of coffee is:

3/4 pound of soybeans and Colombia's opportunity cost of coffee is 1/2 pound of soybeans

3) Refer to figure 2-6. If this economy devotes all of its resources to the production of blankets, then it will produce:

360 blankets

5) Refer to Figure 2-5. It is efficient for this economy to produce:

40 dryers and 70 washers

26) Refer to table 4-6. If these are the only four sellers in the market, then the market quantity supplied at a price of $8 is:

42 units

37) Refer to figure 5-3. Which demand curve is perfectly inelastic?

A

45) GDP does not reflect:

All of the above are correct

51) We would expect the interest rate on Bond A to be higher than the interest rate of Bond B if the two bonds have identical characteristics except that:

Bond A has a term of 20 years and Bond B has a term of 2 years

34) Refer to Scenario 5-1. What can you deduce about the type of good Patty's Pizza is and about the relationship between Patty's Pizza and Sue's Subs?

Normal good: demand increases when consumer income increases Substitute: goods whose demand shifts as the price of one increases therefore, Patty's Pizza is a normal good and Patty's Pizza and Sue's Subs are substitutes.

23) Micah buys a used car for $15,000 and spends $300 on a new radio that is made in China. The end result of these two transactions is:

U.S. consumption purchases increase by $300 and U.S. GDP is unchanged

all else equal, an increase in income of consumers who consider turkey to be an inferior good would cause:

a decrease in demand

39) Refer to figure 4-8. Suppose the figure shows the market demand for laptop computers. Suppose the price of wireless printers, a complementary good, increases. Which of the following changes would occur?

a shift from D1 to D2

7) Refer to figure 2-14. If this society moves from point R to point U,

it gives up 8-0 sweaters to get 60 bushels of apples

4) Refer to Figure 2-7. If this economy moved from point P to point N, then:

it still would not be producing efficiently

24) Refer to figure 4-5. Which of the following would cause the demand curve to shift from Demand C to Demand A in the market for tennis balls in the US?

an expectation by buyers that their incomes will decrease in the very near future

6) Refer to figure 2-9, Panel (a). The movement from point K to point M could be caused by:

an improvement in efficiency

27) Refer to figure 4-15. Which of the following would cause the supply curve to shift from supply A to supply C in the market for beach towels?

an increase in the number of firms selling beach towels

48) Which of the following is an example of physical capital?

bulldozers, backhoes, and other construction equipment

29) Which of the following is NOT included in GDP? (No market transactions, no intermediate goods or used goods)

carrots grown in your garden and eaten by your family

What would NOT shift the supply curve for a good or service?

change in the price of the good or service

36) Refer to Scenario 5-3. The equilibrium price will:

decrease in both the aged cheddar cheese and bread markets

21) Refer to table 4-9. Which combination would produce a decrease in equilibrium quantity and an indeterminate change in equilibrium price?

decrease in demand and decrease in supply

11) Refer to figure 4-10. The movement fro point A to point B represents a(n)

decrease in the quantity supplied

19) Which of the following events must cause equilibrium quantity to decrease?

demand and supply both decrease

50) Refer to figure 25-1. The curve becomes flatter as the amount of capital per worker increases because of:

diminishing returns to capital per labor

52) People who buy newly issued stock in a corporation such as Crate and Barrel provide:

equity finance and so become part owners of Crate and Barrel

22) Demand is elastic if the price elasticity of demand is:

greater than 1

12) Refer to figure 4-16. The shift from S' to S could be caused by an:

increase in input prices

9) Refer to figure 4-1. The movement from point A to point B on the graph shows a(n)

increase in quantity demanded

49) All else equal, if there are diminishing returns, then if a country raised its capital by 100 units last year and by 100 units this year,

the increase in output was greater last year than this year

20) If the supply of a product decreases, then we would expect equilibrium price:

to increase and equilibrium quantity to decrease

31) Refer to figure 2-10, Panel (a). The movement from point W to point Y could be caused by:

unemployment