Econ - final exam unit 1

If toast and butter are complements, then which of the following would increase the demand for toast? a. a decrease in the price of toast b. a decrease in the price of butter c. an increase in the price of butter d. Both a and b are correct.

b

Refer to Figure 3-19. Chile would incur an opportunity cost of 36 pounds of coffee if it increased its production of soybeans by a. 12 pounds .b. 27 pounds. c. 30 pounds. d. 48 pounds.

b

Refer to Figure 4-18. At a price of $35, there would be a a. shortage of 400 units. b. surplus of 200 units. c. surplus of 400 units. d. surplus of 600 units.

c

Refer to Figure 5-9. Using the midpoint method, the price elasticity of demand between point A and point B is 0.33. 0.5. 2.0. 3.0

d

When supply and demand both increase, equilibrium a. price will increase. b. price will decrease. c. quantity may increase, decrease, or remain unchanged. d. price may increase, decrease, or remain unchanged.

d

The principle that "people face tradeoffs" applies to a. individuals. b. families. c. societies. d. All of the above are correct.

d.

Both Dave and Caroline produce sweaters and socks. If Dave's opportunity cost of 1 sweater is 3 socks and Caroline's opportunity cost of 1 sweater is 5 socks, then a. Dave has a comparative advantage in the production of sweaters. b. Caroline has a comparative advantage in the production of sweaters. c. Dave has a comparative advantage in the production of socks. d. Dave has a comparative advantage in the production of both sweaters and socks.

a

For which of the following goods is the income elasticity of demand likely lowest? a. water b. sapphire pendant necklaces c. filet mignon steaks d. fresh fruit

a

If a firm is a price taker, it operates in a a. competitive market. b. monopoly market. c. oligopoly market. d. monopolistically competitive market.

a

Which of the following is likely to have the most price inelastic demand? a. athletic shoes b. running shoes c. Nike running shoes d. Nike Shox running shoes

a

Juanita and Shantala run a business that programs and tests cellular phones. Assume that Juanita and Shantala can switch between programming and testing cellular phones at a constant rate. The following table applies. Refer to Table 3-29. Juanita's opportunity cost of programming one cellular phone is testing

a.

Refer to Figure 2-9, Panel (a). Production is a. possible at points J, K, L, and M, but efficient only at points J, L, and M. b. possible at points J, K, L, and M, but efficient only at point K. c. possible at points J, L, M, and N, but efficient only at points J, L, and M. d. possible at points J, L, M, and N, but efficient only at point N.

a.

Refer to Table 3-29. Shantala has an absolute advantage in a. programming cellular phones and a comparative advantage in programming cellular phones. b. programming cellular phones and a comparative advantage in testing cellular phones .c. testing cellular phones and a comparative advantage in programming cellular phones. d. testing cellular phones and a comparative advantage in testing cellular phones.

a.

The property of society getting the most it can from its scarce resources is called a. efficiency .b. equality. c. externality. d. productivity.

a.

21. Which of the following should be held constant when calculating an income elasticity of demand? a. the quantity of the good demanded b. the price of the good c. income d. All of the above should be held constant.

b

A leftward shift of a demand curve is called a(n) a. increase in demand. b. decrease in demand. c. decrease in quantity demanded. d. increase in quantity demanded.

b

Another term for equilibrium price is a. dynamic price. b. market-clearing price. c. quantity-defining price. d. balance price.

b

If the demand for bananas is elastic, then an increase in the price of bananas will a. increase total revenue of banana sellers. b. decrease total revenue of banana sellers. c. not change total revenue of banana sellers. d. There is not enough information to answer this question.

b

New oak tables are normal goods. What would happen to the equilibrium price and quantity in the market for oak tables if the price of maple tables rises, the price of oak wood rises, more buyers enter the market for oak tables, and the price of the glue used in the production of the new oak tables increased? a. Price will fall, and the effect on quantity is ambiguous. b. Price will rise, and the effect on quantity is ambiguous. c. Quantity will fall, and the effect on price is ambiguous. d. Quantity will rise, and the effect on price is ambiguous.

b

Refer to Figure 3-14. Arturo should specialize in the production of a. tacos and Dina should specialize in the production of burritos. b. burritos and Dina should specialize in the production of tacos. c. both goods and Dina should specialize in the production of neither good. d. neither good and Dina should specialize in the production of both goods.

b

Refer to Figure 4-16. The shift from S to S' could be caused by an a. increase in the price of the good. b. improvement in production technology. c. increase in income. d. increase in input prices.

b

Refer to Figure 4-18. At what price would there be an excess demand of 200 units of the good? a. $15 b. $20 c. $30 d. $35

b

Refer to Figure 4-26. Which of the following movements would illustrate the effect in the market for orange juice of an announcement by the American Dental Association that orange juice erodes tooth enamel? a. Point A to Point B b. Point C to Point B c. Point C to Point D d. Point A to Point D

b

When the price of a good is $5, the quantity demanded is 100 units per month; when the price is $7, the quantity demanded is 80 units per month. Using the midpoint method, the price elasticity of demand is about a. 0.22. b. 0.67. c. 1.33. d. 1.50.

b

In economics, capital refers to a. the finances necessary for firms to produce their products. b. buildings and machines used in the production process. c. the money households use to purchase firms' output. d. stocks and bonds.

b.

Tom Brady should pay someone else to mow his lawn instead of mowing it himself, unless a. Brady has an absolute advantage over everyone else in mowing his lawn. b. Brady has a comparative advantage over everyone else in mowing his lawn. c. Brady's opportunity cost of mowing his lawn is higher than it is for everyone else. d. All of the above are correct.

b.

A decrease in the price of a good will a. increase demand. b. decrease demand. c. increase quantity demanded. d. decrease quantity demanded.

c

An improvement in production technology will a. increase a firm's costs and increase its supply. b. increase a firm's costs and decrease its supply. c. decrease a firm's costs and increase its supply. d. decrease a firm's costs and decrease its supply.

c

Assume a market is perfectly competitive. When a new producer enters the market, the a. price in the market increases. b. price in the market decreases. c. price in the market does not change. d. market is no longer a competitive market.

c

If an increase in income results in a decrease in the quantity demanded of a good, then for that good, the a. cross-price elasticity of demand is negative. b. price elasticity of demand is elastic. c. income elasticity of demand is negative. d. income elasticity of demand is positive.

c

If the price elasticity of demand for a good is 2.0, then a 10 percent increase in price results in a a. 0.2 percent decrease in the quantity demanded. b. 5 percent decrease in the quantity demanded. c. 20 percent decrease in the quantity demanded. d. 40 percent decrease in the quantity demanded.

c

Refer to Figure 4-15. Which of the following would cause the supply curve to shift from Supply B to Supply A in the market for butter? a. a decrease in the price of butter b. an increase in the price of margarine c. an increase in the price of milk d. an improvement in technology that allows firms to use less labor in the production of butter

c

Refer to Figure 4-4. If Yasmine and Mercedes are the only two consumers in the market, then the market quantity demanded at a price of $12 is a. 3 units .b. 6 units. c. 9 units. d. 12 units.

c

Which of the following statements is not valid when the market supply curve is vertical? a. Market quantity supplied does not change when the price changes. b. Supply is perfectly inelastic. c. An increase in market demand will increase the equilibrium quantity. d. An increase in market demand will increase the equilibrium price.

c

Guns and butter are used to represent the classic societal tradeoff between spending on a. durable and nondurable goods. b. imports and exports. c. national defense and consumer goods. d. law enforcement and agriculture.

c.

Which of the following events could shift the demand curve for gasoline to the left? a. The income of gasoline buyers rises, and gasoline is a normal good. b. The income of gasoline buyers falls, and gasoline is an inferior good. c. Public service announcements run on television encourage people to walk or ride bicycles instead of driving cars. d. The price of gasoline rises.

c.

Refer to Table 5-2. Using the midpoint method, if the price falls from $200 to $150, the price elasticity of demand is a. zero. b. unit elastic. c. inelastic. d. elastic.

d

Which of the following events must cause equilibrium quantity to rise? a. demand increases and supply decreases b. demand and supply both decrease c. demand decreases and supply increases d. demand and supply both increase

d

Efficiency means that a. society is conserving resources in order to save them for the future. b. society's goods and services are distributed equally among society's members. c. society's goods and services are distributed fairly, though not necessarily equally, among society's members. d. society is getting the maximum benefits from its scarce resources.

d.