Econ midterm 1 exam review

Which of the following is likely to shift the market demand curve for school textbooks to the right? A) An increase in the enrollment rates in high schools B) A fall in the total income of all consumers C) An increase in school tuition fees D) A fall in the price of school textbooks

An increase in the enrollment rates in high schools

If Project X has a cost of $6 and provides a benefit of $10 and Project Y has a cost of $25 and provides a benefit of $27, which of the following statements is true? A)Switching from Project Y to Project X decreases net benefit by $2. B)Switching from Project X to Project Y increases net benefit by $2. C)An individual can optimize by choosing Project Y. D)An individual can optimize by choosing Project X.

An individual can optimize by choosing Project X.

Which of the following statements is true? A) The scientific method used by economists is based on idealism and not empiricism. B)Testing with data enables economists to distinguish between good models and bad models. C)Models that economists use are perfect replicas of reality. D)Models help economists explain the past but do not help predict the future.

Testing with data enables economists to distinguish between good models and bad models.

At the midpoint of a downward-sloping, linear demand curve for a good, the price elasticity of demand for the good is ________. (all numbers below are in absolute value) A) equal to one B) greater than one C) equal to zero D) between zero and one

equal to one

Scenario: A firm wants to set up a factory. It has four different options. The rent of the factory in each of the four different locations and the time taken to transport the product from each location to the market is shown in the table below. The opportunity cost of time is $10 per hour. Refer to the scenario above. Which is the optimum location for the firm to set up its factory? A) Far B) very close C) close D) very far

far

An omitted variable is a variable that A)is removed from a study as it can lead to the problem of reverse causality B) is purposely left out as it does not aid an economic analysis C)has been left out, and if included, would explain why the variables considered in a study are correlated D)does not cause other variables in a study to change when it changes

has been left out, and if included, would explain why the variables considered in a study are correlated

Sofia is selling homemade cakes. The demand for homemade cakes is elastic. If Sofia reduces the price of her cakes, ________. A) her revenue will increase B) her revenue will decrease C) she will not make any revenue D) her revenue will not change

her revenue will increase

From Chapter 5 Podcast: According to what Wolfers said about the income elasticity, we can conclude that (given our definitions from class), the amount of money parents give to their kids through the tooth fairy) is what kind of good? A) Normal and necessity B) inferior C) normal and luxury

normal and luxury

From Chapter 1 Podcast: Which idea did Lisa Cook say was the most useful idea in Economics? A) Opportunity Cost B) Causal Inference C) Comparative Advantage D) Lump of Labor E) Thinking on the Margin

opportunity cost

When two variables move in the same direction, they are said to be A)uncorrelated B)equivalent C)positively correlated D)negatively correlated

positively correlated

An expected increase in the market price of oil in the coming year is likely to ________ in the current year. A) shift the supply curve of oil to the right B) cause no changes in the demand and supply curves of oil C) shift the supply curve of oil to the left D) shift the demand curve for oil to the left

shift the supply curve of oil to the left

Assume that a worker in a technology firm can produce 3 circuit boards in an hour. Due to subsequent innovation, she is now able to produce 6 circuit boards per hour. Other things remaining the same, the firm's supply curve is likely to ________. A) remain unchanged B) shift to the left C) become steeper D) shift to the right

shift to the right

The market supply is the ________ of the individual supplies of all the potential sellers. A) square of the sum B) square root of the sum C) product D) sum

sum

The following table shows the marginal benefit that Marcus derives by consuming different quantities of hotdog and soda. The price of a hotdog is $3, and the price of a soda is $1. Refer to the table above. The price of a soda increases from $1 to $2. What is the optimal combination of Soda and Hotdog for Marcus, if his weekly budget for hotdog and soda is $10? A) $40 B) $52 C) $14 D) $8

$52

The following table shows the market demand schedule and supply schedule for notebooks. Refer to the table above. What is the shortage in the market when the price of a notebook is $1? A) 0 units B) 14 units C) 10 units D) 16 units

16 units

Scenario: Ryan wants to rent an apartment. The following table shows the monthly rent of five apartments and the number of hours per month it takes to commute to work from each apartment. Ryan's opportunity cost of time is $15 per hour. Refer to the scenario above. The total cost per month is the lowest if Ryan chooses to rent Apartment ________. A)1 B)3 C)2 D)4

2

The following table shows the marginal benefit that Marcus derives by consuming different quantities of hotdog and soda. The price of a hotdog is $3, and the price of a soda is $1. Refer to the table above. The price of a soda increases from $1 to $2. What is the optimal combination of Soda and Hotdog for Marcus, if his weekly budget for hotdog and soda is $10? A) 4 sodas, and 2 hotdogs B) 3 sodas, and 3 hotdogs C) 6 sodas, and 5 hotdogs D) 2 sodas, and 2 hotdogs

2 sodas, and 2 hotdogs

From Interview with Stefanie Ramirez: In the interview, we discussed a regulation on payday lenders. When was this regulation passed? A) 2007 B) 2018 C) 2011 D) 2008

2008

The following table shows the market demand schedule and supply schedule for notebooks. Refer to the table above. What is the equilibrium price of notebooks? A) $2 B) $6 C) $4 D) $7

$4

The following table shows the marginal benefit that Marcus derives by consuming different quantities of hotdog and soda. The price of a hotdog is $3, and the price of a soda is $1. Refer to the table above. What is the optimal combination of Soda and Hotdog for Marcus, if his weekly budget for hotdog and soda is $10? A) 6 sodas, and 5 hotdogs B) 3 sodas, and 3 hotdogs C) 4 sodas, and 2 hotdogs D) 2 sodas, and 4 hotdogs

4 sodas, and 2 hotdogs

Scenario: Ryan wants to rent an apartment. The following table shows the monthly rent of five apartments and the number of hours per month it takes to commute to work from each apartment. Ryan's opportunity cost of time is now $60 per hour. Refer to the scenario above. Now that Ryan's opportunity cost of time is $60 per hour, renting which apartment will minimize Ryan's total cost every month? A)5 B)3 C)4 D)2

5

Which of the following factors will NOT cause a shift in the demand for a good? A) A change in the number of consumers B) A change in consumer incomes C) A change in tastes and preferences D) A change in the market price of the good

A change in the market price of the 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 demand curve for Z B) A rightward shift of the demand curve for Z C) A leftward shift of the supply curve of Z D)A rightward shift of the supply curve of Z

A leftward shift of the demand curve for Z

From Chapter 2 Podcast: A/B testing can be thought of as an example of A) Correlation only B) A natural experiment C) A randomized experiment

A randomized experiment

Which of the following is likely to lead to an increase in the quantity supplied of steel? A)An expected increase in the demand for steel in the future B)An increase in the productivity of capital due to technological innovation C) A rise in the market price of steel D)A fall in the wage rate of labor employed in the steel industry

A rise in the market price of steel

Which of the following is likely to cause the demand curve for cars to shift to the left? A) A rise in the price of cars B) An increase in the cost of production, leading to an increase in the price of cars C) An increase in the economy's national income D) A rise in the price of gasoline

A rise in the price of gasoline

Which of the following is a key property of models? A) All models are consistent and do not make incorrect predictions. B) Empiricism is not essential for testing models. C) All economic models begin with assumptions. D)All models can be used for a limited time only.

All economic models begin with assumptions.

which of the following statements is true of data? A) Anecdotes are good substitutes data. B)Data help verify causal relationships. C) The fewer data that are available, the better the empirical analysis will be. D) Data are not important for evaluating theories.

Data help verify causal relationships.

Which of the following goods is likely to have an income elasticity of demand greater than one? A) Diamond jewelry B) Gasoline C) salt D) bread

Diamond jewelry

Which of the following statements is true? A) People always successfully optimize given the limited information they have. B) Optimization is an easy process, and all economic agents are perfect optimizers. C) It is easier for a person to optimize when he has less information. D) Optimization implies choosing the best option from a set of alternatives.

Optimization implies choosing the best option from a set of alternatives.

Optimization can be achieved using either of two techniques of cost-benefit analysis. Which of the following correctly identifies the techniques? A) Optimization in revenues and optimization using costs B)Optimization using total value and optimization using profits C)Optimization using total value and optimization using marginal analysis D)Optimization using marginal analysis and optimization using costs

Optimization using total value and optimization using marginal analysis

Which of the following statements is true? A)Normative economics describes what people actually do. B)Normative economics is free from the value judgments, tastes, and preferences of economic agents. C)Positive economics describes what people ought to do. D)Positive economics generates objective descriptions that can be verified with data.

Positive economics generates objective descriptions that can be verified with data.

Which of the following is true of a market? A) A market must be under continuous surveillance and government control. B) A market always requires a specific physical location. C) Goods and services are exchanged at fixed prices in all markets. D) Price acts as a selection device for buyers and sellers in every market

Price acts as a selection device for buyers and sellers in every market

_____ occurs when the direction of cause and effect is mixed up in a study. A) Omitted variable bias B) Adverse causality C) Reverse causality D) Limited information bias

Reverse causality

Which of the following is NOT a key principle of economics? A) Empiricism B)Optimization C)Equilibrium D)Substitution

Substitution

From Chapter 3 Podcast: In terms of optimization, what was the key tradeoff? A) Spend per table vs number of tables B) Price on menu vs number of customers C) Number of servers vs cost of labor

Spend per table vs number of tables

From Interview with Amber Qureshi Urrutia: What is the result IN THE DATA about major choice in a recession? A) Students were less likely to finish college B) Students tended to choose higher paying majors C) Students did not change their choices D) Students chose lower paying majors

Students tended to choose higher paying majors

Which of the following statements is true of the cross-price elasticity of demand? A) The cross-price elasticity of demand between complements is negative. B) The cross-price elasticity of demand between substitutes is negative. C) The cross-price elasticity of demand between substitutes is zero. D) The cross-price elasticity of demand between substitutes is zero.

The cross-price elasticity of demand between complements is negative.

Suppose the prices of a pair of jeans, a shirt, and a tie are $30, $20, and $10, respectively. Which of the following statements is true in this context? A) The opportunity cost of buying a tie is 2 shirts. B) The opportunity cost of buying a shirt is 2 ties. C) The opportunity cost of buying a pair of jeans is 2 ties. D) The opportunity cost of buying a tie is 3 pairs of jeans.

The opportunity cost of buying a shirt is 2 ties.

In a perfectly competitive market, ________. A) there is no provision for the protection of property rights B)all exchanges take place involuntarily C) all sellers sell an identical good or a service D) there is only one seller and many buyers

all sellers sell an identical good or a service

Economic reasoning allows economic agents to make decisions A) solely on the basis of tastes and preferences for various options B)by replicating the choices made by other economic agents C) by random selection D) by comparing the costs and benefits of various options

by comparing the costs and benefits of various options

The scientific method refers to the process by which economists and other scientists ________. A) plot graphs to illustrate relationships between different economic variables B) develop models to explain the past but not to predict the future C) collect data for further use in research D) develop models of the world and test those models with data

develop models of the world and test those models with data

A supply schedule is a table that reports the A) expected excess supply in the market at different prices B) different quantities of a good that producers are willing to sell at different income levels C) different quantities of a good that producers are willing to sell at different prices D) profits earned by producers at different levels of production

different quantities of a good that producers are willing to sell at different prices

The demand curve for most goods is normally ________. A)upward sloping B)parallel to the y-axis C) parallel to the x-axis D) downward sloping

downward sloping

Economics is primarily the study of A)the state, nation, government, and politics and policies of governments B)how agents choose to allocate scarce resources and how these choices affect society C) the mental functions and behavior of individuals and groups D)the problems related to the existence and evolution of society

how agents choose to allocate scarce resources and how these choices affect society

From Interview with Nelson Esparza: Nelson described Economics as being a social science because it is based off of A) money B) numbers C) hard science D) human behavior

human behavior

Other things remaining the same, a leftward shift in the supply curve will lead to a(n) ________. A)increase in the equilibrium price and a decrease in the equilibrium quantity B) increase in the equilibrium price and the equilibrium quantity C)decrease in the equilibrium price and an increase in the equilibrium quantity D)decrease in the equilibrium price and the equilibrium quantity

increase in the equilibrium price and a decrease in the equilibrium quantity

Willingness to pay A) is the highest price that a buyer is willing and able to pay for a unit of good B) is equal to the price of the lowest-priced good in a consumption bundle C) is equal to the price of the highest-priced good in a consumption bundle D) is the lowest price that a buyer is willing and able to pay for a unit of good

is the highest price that a buyer is willing and able to pay for a unit of good

A(n) ________ is a group of buyers and sellers who are trading goods and/or services. A) enterprise B) market C) firm D) government

market

When the market for a commodity is in equilibrium, A)all buyers of the commodity will want to change their behavior B) no economic agent will want to change their behavior C) all sellers of the commodity will want to change their behavior D) there will still be some unsold stock of the commodity

no economic agent will want to change their behavior

Consumer surplus is ________. A) the ratio of the willingness to pay for a good to the price paid for the good B) the sum of the willingness to pay for a good and the price paid for the good C) the product of the willingness to pay for a good and the price paid for the good D) the difference between the willingness to pay for a good and the price paid for the good

the difference between the willingness to pay for a good and the price paid for the good

Elasticity is A) the sum of the percentage changes in two variables B) the product of the percentage changes in two variables C) the ratio of the percentage changes in two variables D) the difference between the percentage changes in two variables

the ratio of the percentage changes in two variables

If the demand and supply curves for a commodity both shift to the left by the same amount, then in comparison to the initial equilibrium, the new equilibrium will be characterized by ________. A) the same price and a higher quantity B) a lower price and a higher quantity C) the same price and a lower quantity D) a higher price and quantity

the same price and a lower quantity