Econ Exam 1

Suppose a university raises its tuition by 6 percent and as a result the enrollment of students decreases by 3 percent. The absolute value of the price elasticity of demand is Select one: a. 8.0. b. 2.0. c. 6.0. d. 0.5.

0.5

Suppose the quantity demanded of ski boats falls from 4.0 million to 3.0 million as a result of an average price increase from $20,000 to $25,000 per boat. The absolute value of the price elasticity of demand is closest to Select one: a. 0.78. b. 0.20. c. 1.29. d. 0.29.

1.29

On the basis Table 1.2, if the economy is currently producing at point C, what is the opportunity cost of producing at point B? Combination Number of B-1 Bombers Opportunity cost(Foregone Stealth) Number of Stealth Bombers Opportunity cost (Foregone B-1) A 20 Na 195 B 35 180 C 45 150 D 50 100 NA Select one: a. 45 B-1 bombers. b. 180 Stealth bombers. c. 35 Stealth bombers. d. 10 B-1 bombers.

10 b-1 bombers

Which of the following is not a factor of production? Select one: a. A physician. b. $100,000 cash. c. Six thousand acres of farmland. d. A bulldozer.

100000 cash

For product X, the price elasticity of demand has an absolute value of 3.5. This means that quantity demanded will increase by Select one: a. 1 unit for each $3.50 decrease in price, ceteris paribus. b. 1 percent for each 3.5 percent decrease in price, ceteris paribus. c. 3.5 units for each $1 decrease in price, ceteris paribus. d. 3.5 percent for each 1 percent decrease in price, ceteris paribus.

3.5 percent for each 1 percent decrease in price, ceteris paribus

suppose computer prices at an office supply store fall from $1,000 to $900 and as a result the quantity demanded of typewriters decreases from 40 to 20 per month. The cross-price elasticity of demand is closest to Select one: a. 0.2. b. 6.3. c. 5.0. d. 0.16.

6.3

Which panel of Figure 3.3 represents the changes in the market for textbooks when the cost of paper decreases and the government increases the number of student loans it grants? Select one: a. B. b. C. c. A. d. D.

A

At which point is society employing some of its available technology but not all of it? (See Figure 1.1.) Select one: a. A. b. C. c. B. d. D.

C

Ceteris paribus, if buyers expect the price of airline tickets to fall in the future, then right now there should be Select one: a. A decrease in the demand for airline tickets. b. An increase in the demand for airline tickets. c. No change in the supply of or demand for airline tickets because the price is not changing right now. d. A decrease in the supply of airline tickets.

a decrease in the demand for airline tickets

Ceteris paribus, which of the following is most likely to cause an increase in the quantity demanded of perfume? Select one: a. An increase in the price of electricity. b. An increase in income. c. A decrease in tastes for perfume. d. A decrease in the price of perfume.

a decrease in the price of perfume

Which of the following will cause the production possibilities curve to shift inward? Select one: a. An increase in the working-age population. b. A technological advance. c. A decrease in the size of the labor force. d. An increase in knowledge.

a decrease in the size of the labor force

Ceteris paribus, if the subsidies given to corn syrup producers decrease, then we can expect Select one: a. An increase in the demand for corn syrup. b. An increase in the supply of corn syrup. c. A decrease in the supply of corn syrup. d. A decrease in the demand for corn syrup.

a decrease in the supply of corn syrup

A technological advance would best be represented by Select one: a. A movement from inside the production possibilities curve to a point on the production possibilities curve. b. A shift inward of the production possibilities curve. c. A shift outward of the production possibilities curve. d. A movement from the production possibilities curve to a point inside the production possibilities curve.

a shift outward of the production possibilities curve

Ceteris paribus, which of the following would generally cause an increase in the demand curve for new automobiles? Select one: a. Consumer expectations that the price of new automobiles will be lower next year. b. A decrease in the price of new automobiles. c. The new models being perceived as ugly compared with old models. d. An increase in consumers' income.

an increase in consumers' income

Ceteris paribus, which of the following is most likely to cause a decrease in the supply of skateboards? Select one: a. An improvement in skateboard-making technology. b. All of the choices are correct. c. An increase in the cost of materials used to produce skateboards. d. An increase in the price of skateboards.

an increase in the cost of materials used to produce skateboards

Assume that pencils and pens are substitutes. If the price of pencils rises ceteris paribus, then we will see Select one: a. An increase in the demand for pens. b. A decrease in the demand for pens. c. A decrease in the supply of pens. d. An increase in the supply of pens.

an increase in the demand for pens

Peanut butter and jelly are complements. A decrease in the price of one will result in Select one: a. An increase in the demand for the other. b. A decrease in the demand for the other. c. A decrease in the quantity demanded of the other. d. An increase in the quantity demanded of the other.

an increase in the demand for the other

Ceteris paribus, which of the following is most likely to cause an increase in the quantity supplied of perfume? Select one: a. An increase in the salaries paid to perfume makers. b. An improvement in perfume-making technology. c. An increase in the number of sellers of perfume. d. An increase in the price of perfume.

an increase in the price of perfume

Which of the following is most likely a private good? Select one: a. National defense. b. The administration of justice. c. Bicycles. d. Flood control

bicycles

Which of the following produces external benefits? Select one: a. College students getting vaccinated against the flu. b. Passive smoke in a public building. c. All of the choices are correct. d. Garbage dumped in the Atlantic Ocean. Feedback

college students getting vaccinate against the flu

Capital, as economists use the term, refers to Select one: a. The cash needed to start a new business. b. Final goods that are used to produce other goods and services. c. Shares of stock issued by businesses. d. The costs of operating a business.

final goods that are used to produce other goods and services

When an economy is producing efficiently, it is Select one: a. Getting the maximum goods and services possible from the available resources. b. Experiencing decreasing opportunity costs. c. Producing equal amounts of all goods. d. Producing a combination of goods and services beyond the production possibilities curve.

getting the maximum goods and services possible from the available resources.

Ceteris paribus, if income increases and as a result, the demand for good X increases and the demand for good Y falls, Select one: a. Goods X and Y are complementary goods. b. Goods X and Y are substitute goods. c. Good X is a normal good and good Y is an inferior good. d. Good X is an inferior good and good Y is a normal good.

good x is a normal good and good y is an inferior good

Which of the following occurs if government intervention forces the economy inside the production possibilities curve? Select one: a. Government failure. b. Income inequality. c. Market failure. d. Externalities.

government failure

According to the law of demand, a demand curve Select one: a. Is a horizontal or flat line. b. Exceeds the economy's ability to produce. c. Has a negative slope. d. Has a positive slope.

has a negative slope

A rightward shift in a demand curve and a leftward shift in a supply curve both result in a Select one: a. Higher equilibrium price. b. Lower equilibrium price. c. Higher equilibrium quantity. d. Lower equilibrium quantity.

higher equilibrium price

Elasticity of supply looks at Select one: a. How responsive sellers are to a change in price. b. How responsive producers are to a change in quantity demanded. c. The responsiveness of sellers to a change in consumer's incomes. d. How much quantity demanded changes with a change in price.

how responsive sellers are to a change in price

The basic factors of production include Select one: a. Labor and money. b. Land, labor, money, and inputs. c. Land, labor, money, and capital. d. Land, labor, capital, and entrepreneurship.

land, labor, capital, entrepreneurship

Sam owns a taco restaurant, and he conducted a consumer survey that indicates that the price elasticity of demand for his restaurant is 3.5. You would advise Sam to Select one: a. Keep his price the same to maximize revenues. b. Offer more high-priced products. c. Raise his price to increase revenues. d. Lower his price to increase revenue.

lower his price to increase revenue

A change in demand means there has been a shift in the demand curve, and a change in quantity demanded Select one: a. Means a shortage or surplus will result from holding prices constant. b. Results from a change in price of other goods. c. Means that price has changed and there is movement along the demand curve. d. Also means demand has shifted.

means that price has changed and there is movement along the demand curve

Smart phones and apps are complementary goods. The cross price elasticity of demand between smart phones and apps is expected to be. Select one: a. Equal to zero. b. Undefined. c. Negative. d. Positive.

negative

If incomes fall by 5 percent and the quantity demanded for new cars falls by 10 percent, Select one: a. New cars are an inferior good, and the income elasticity is +0.5. b. New cars are a normal good, and the income elasticity is +2.0. c. New cars are a normal good, and the income elasticity is +.5. d. New cars are an inferior good, and the income elasticity is +2.0.

new cars are a normal good, and the income elasticity is +2.0

At the equilibrium price, there are Select one: a. Shortages. b. Excess inventories. c. Surpluses. d. No shortages or surpluses.

no shortages or surpluses

With respect to factors of production, which of the following statements is not true? Select one: a. Factors of production are also known as resources. b. Only those resources that are privately owned are counted as factors of production. c. In order to produce any good or service, it is necessary to have factors of production. d. Factors of production include land, labor, capital, and entrepreneurship.

only those resources that are privately owned are counted as factors of production

Ceteris paribus, as the number of substitutes for a good increases, the Select one: a. Income elasticity of demand should become negative. b. Cross-price elasticity of demand should become negative. c. Price elasticity of demand should become smaller. d. Price elasticity of demand should become larger.

price elasticity of demand should become larger

Suppose that if your income is $100,000, your tax is $20,000, but if your income is $200,000, your tax is $45,000. Such a tax is Select one: a. Proportional. b. Regressive. c. A flat tax. d. Progressive.

progressive

A tax is regressive if it takes a Select one: a. Larger number of dollars as income rises. b. Smaller fraction of dollars as income falls. c. Smaller fraction of dollars as income rises. d. Larger number of dollars as income falls.

smaller fraction of dollars as income rises

In economics, scarcity means that Select one: a. The market mechanism has failed. b. Society's desires exceed resources available. c. A shortage of a particular good will cause the price to fall. d. A production possibilities curve cannot accurately represent the trade-off between two goods.

society's desires exceed resources available.

When the price of taking a ride in Uber increases, the demand for Lyft rides increases, ceteris paribus. Uber and Lyft are therefore Select one: a. Inelastic. b. Substitutes. c. Elastic. d. Complements.

substitutes

If there is a surplus at a given price, then Select one: a. The price is zero. b. That price is greater than the equilibrium price. c. The market is in equilibrium at that price. d. That price is lower than the equilibrium price.

that price is greater than the equilibrium price

The opportunity cost of studying for an economics test is Select one: a. Zero because you knew when you registered for the class that studying would be required. b. The money you spent on tuition for the class. c. Negative because it may improve your grade. d. The activity that is the best alternative use of your time.

the activity that is the best alternative use of your time.

The production possibilities curve illustrates Select one: a. The limitations that exist because of scarce resources. b. That there is no limit to what an economy can produce. c. That there is no limit to the level of output. d. The existence of unlimited wants and resources.

the limitations that exist because of scare resources.

A market is said to be in equilibrium when Select one: a. Demand is fully satisfied at all alternative prices. b. The supply intentions of all sellers are realized. c. The quantity demanded equals the quantity supplied. d. The buying intentions of all consumers are realized.

the quantity demanded equals the quantity supplied

If the elasticity of demand is 3, and the price rises by 15 percent, then Select one: a. The quantity demanded will increase by 5 percent. b. The percentage change in quantity demanded will fall as income rises. c. The quantity demanded will fall by 45 percent. d. The quantity demanded will rise by 4.5 percent.

the quantity demanded will fall by 45 percent

If the consumption of a good yields external benefits, then Select one: a. The social demand is less than the market demand. b. The social demand is greater than the market demand. c. The social demand is equal to the market demand. d. There is neither social demand nor market demand for the good.

the social demand is greater than the market demand

The market mechanism may best be defined as Select one: a. Price regulation by government. b. The process by which the production possibilities curve shifts inward. c. The use of market prices and sales to signal desired output. d. The use of market signals and government directives to select economic outcomes.

the use of market prices and sales to signal desired output.

Which of the following is the best example of land? Select one: a. A barber's chair. b. The ethanol refined from corn. c. The water used to make a soft drink. d. A factory that produces new goods and services.

the water used to make a soft drink

If the actual market price were fixed at $15 per unit in Figure 3.2, Figure 3.2 Supply and Demand Select one: a. There would be a surplus of 40 units. b. There would be a surplus of 20 units. c. There would be a shortage of 40 units. d. There would be a shortage of 20 units.

there would be a surplus of 40 units

Opportunity cost is Select one: a. Measured only in dollars and cents. b. What is given up in order to get something else. c. The difficulty associated with using one good in place of another. d. The total dollar cost to society of producing the goods.

what is given up in order to get something else.