econ midterm

A fall in the price of a good from $11.50 to $8.50 results in an increase in the quantity demanded from 19,200 to 20,800 units. The price elasticity of demand is A) 0.27. B) 0.08. C) 30. D) 3.75. E) 8.0. Use the table below to answer the following questions. Table 4.1.1 Demand schedule for good A.

A) 0.27.

If a 10 percent rise in price leads to an 8 percent decrease in quantity demanded, the price elasticity of demand is A) 0.8. B) 0.125. C) 8. D) 1.25. E) 80.

A) 0.8.

Which one of the following illustrates an elastic demand? A) A 10 percent rise in price leads to a 20 percent decrease in quantity demanded. B) A price elasticity of demand equal to zero. C) A price elasticity of demand equal to 1.0. D) A price elasticity of demand equal to 0.2. E) A 10 percent rise in price leads to a 5 percent decrease in quantity demanded.

A) A 10 percent rise in price leads to a 20 percent decrease in quantity demanded.

Which one of the following must be true if demand is income elastic? A) A small percentage increase in income will result in a large percentage increase in quantity demanded. B) A percentage change in price will lead to a larger percentage change in quantity demanded. C) The good is an inferior good. D) An increase in income will decrease the quantity demanded. E) A large percentage increase in income will result in a small percentage increase in quantity demanded.

A) A small percentage increase in income will result in a large percentage increase in quantity demanded.

The demand for a good is price inelastic if A) a rise in price results in an increase in total revenue. B) the good is a luxury. C) an increase in income results in an increase in total revenue. D) a rise in price results in a decrease in total revenue. E) an increase in income results in a decrease in total revenue.

A) a rise in price results in an increase in total revenue.

If A is an inferior good and consumer income rises, the demand for A A) decreases and the equilibrium price and the equilibrium quantity decrease. B) decreases and the equilibrium price falls but the equilibrium quantity increases. C) increases and the equilibrium price rises but the equilibrium quantity decreases. D) increases and the equilibrium price and the equilibrium quantity increase. E) decreases and the equilibrium price rises; as a result, the equilibrium quantity decreases.

A) decreases and the equilibrium price and the equilibrium quantity decrease

Which of the following quotations illustrates economic growth? A) "The firm should lower the price it charges for widgets and gadgets." B) "If the firm invests more in capital equipment, it can expand production next year." C) "The firm should sell more gadgets, even if it means less widget sales." D) "The more and more gadgets the firm produces, the bigger the fall in widget production." E) "The firm has been able to lower costs due to its extensive experience in building widgets."

B) "If the firm invests more in capital equipment, it can expand production next year."

In Table 3.4.1, the equilibrium quantity is A) 420 units. B) 500 units. C) 320 units. D) 200 units. E) none of the above; there is no equilibrium.

B) 500 units.

Some sales managers are talking shop. Which of the following quotations refers to a movement along the demand curve? A) "It has been an unusually mild winter; our sales of wool scarves are down from last year." B) "We decided to cut our prices, and the increase in our sales has been remarkable." C) "Since our competitors raised their prices, our sales have doubled." D) "The Green movement has sparked an increase in our sales of biodegradable products." E) None of the above..

B) We decided to cut our prices, and the increase in our sales has been remarkable."

The price of good X falls and the demand for good Y decreases. We can conclude that A) X and Y are independent of each other. B) X and Y are substitutes. C) X is a normal good. D) X is an inferior good. E) X and Y are complements.

B) X and Y are substitutes.

A situation in which resources are either unused or misallocated or both is represented in a production possibilities frontier diagram by A) a point outside the production possibilities frontier. B) a point inside the production possibilities frontier. C) a point on or inside the production possibilities frontier. D) a point above or to the right of the production possibilities frontier. E) any point on either the horizontal or the vertical axis.

B) a point inside the production possibilities frontier.

Which one of the following events shifts the demand curve for grape jelly to the right? A) an increase in the price of peanut butter, a complement of grape jelly B) an increase in income if grape jelly is a normal good C) a decrease in the population D) a decrease in the price of strawberry preserves, a substitute for grape jelly E) a decrease in the price of grape jelly

B) an increase in income if grape jelly is a normal good

The concept of opportunity cost A) explains that goods are swapped for other goods. B) implies that because productive resources are scarce, we must give up some of one good to acquire more of another. C) implies that a double coincidence of wants must be present for exchange to take place. D) cannot be explained by using a production possibilites frontier. E) implies that when a person is more efficient in the production of one good, he should produce that good and exchange it for some good that he is relatively less efficient at producing. Use the figure below to answer the following questions.

B) implies that because productive resources are scarce, we must give up some of one good to acquire more of another.

Refer to Table 3.5.2. A premature frost destroys half the coffee trees. This change would be represented as a A) rightward shift of the demand curve. B) leftward shift of the supply curve. C) movement down along the supply curve. D) rightward shift of the supply curve. E) leftward shift of the demand curve.

B) leftward shift of the supply curve.

Sally has to decide whether to study for her economics test or her accounting test. If she chooses to study for accounting, her opportunity cost of studying accounting is A) equal to the value of studying economics. B) studying economics. C) not comparable to the value of studying economics. D) less than the value of studying economics. E) the future lost wages that will occur if she fails her accounting exam.

B) studying economics.

If a 10 percent increase in price results in a 9 percent increase in quantity supplied, A) the good is an inferior good. B) supply is inelastic. C) the good is a normal good. D) supply is elastic. E) supply is unit elastic.

B) supply is inelastic.

The price of a good will fall if A) supply of the good decreases. B) supply of the good increases. C) supply of the good remains constant. D) demand for the good remains constant. E) demand for the good increases.

B) supply of the good increases.

Which one of the following concepts is illustrated by a production possibilities frontier? A) profit B) the tradeoff between producing one good versus another C) consumption D) monetary exchange E) investment

B) the tradeoff between producing one good versus another

Refer to the production possibilities frontier in Figure 2.1.2. At point C, what is the opportunity cost of increasing the production of Y from 20 to 50 units? A) 20 units of Y B) 8 units of X C) 2 units of X D) 6 units of X E) 30 units of Y Use the table below to answer the following questions. Table 2.1.2 Production Possibilities

C) 2 units of X

The growth of capital resources, including human capital is A) technological change. B) opportunity cost. C) capital accumulation. D) depreciation. E) none of the above.

C) capital accumulation.

If goods X and Y are substitutes in production, then a rise in the price of good X A) decreases the demand for good Y. B) might change the supply of Y; it depends on whether X and Y are also substitutes. C) decreases the supply of good Y. D) increases the demand for good Y. E) increases the supply of good Y.

C) decreases the supply of good Y

Refer to Table 4.1.1. If the price of good A falls from $4 to $3, A) demand is unit elastic in this range. B) total revenue will increase. C) demand is inelastic in this range. D) total revenue will remain constant. E) demand is elastic in this range.

C) demand is inelastic in this range.

Complete the following sentence. A surplus A) is the amount by which the quantity supplied exceeds the equilibrium quantity. B) will lead to rising prices. C) exists if the price is above the equilibrium price. D) is the amount by which the quantity demanded exceeds the quantity supplied. E) is the amount by which the quantity demanded exceeds the equilibrium quantity.

C) exists if the price is above the equilibrium price.

Suppose that Simon Fraser University decides to raise tuition fees to increase the total revenue it receives from students. This policy works only if the demand for a Simon Fraser University education is A) greater than the demand for a University of Western Ontario education. B) perfectly elastic. C) inelastic. D) unit elastic. E) elastic.

C) inelastic.

If good A is a complement of good B, then the cross elasticity of demand is A) zero. B) 12. C) negative. D) infinity. E) positive.

C) negative.

Which one of the following topics does microeconomics study? A) effect of interest rates on national economic growth B) determination of total production in a country C) reasons for a fall in the price of orange juice D) effect of the government budget deficit on employment E) the effect of a rise in the Canadian dollar on Canada's exports

C) reasons for a fall in the price of orange juice

The marginal benefit curve for a good A) is upward-sloping. B) shows the benefit a firm receives from producing one more unit of that good. C) shows the most a consumer is willing to pay for one more unit of that good. D) is bowed outward. E) none of the above. Use the figure below to answer the following questions.

C) shows the most a consumer is willing to pay for one more unit of that good.

If the quantity of textbooks supplied is 10,000 per year and the quantity of textbooks demanded is 8,000 per year, there is a ________ in the market and the price will ________. A) shortage; fall B) shortage; rise C) surplus; fall D) surplus; rise E) surplus; either rise or fall depending on whether supply increases to meet the surplus Use the figure below to answer the following questions.

C) surplus; fall

Which one of the following is a necessary consequence of scarcity? A) low profits B) no choices required C) the requirement of making choices D) high profits E) all wants are satisfied

C) the requirement of making choices

Which one of the following is an example of a factor of production? A) a computer game B) a donut C) the skills of a welder D) an insurance policy E) an IBM stock certificate

C) the skills of a welder

When a firm decides to produce more hybrid cars and fewer gas guzzlers, it is answering the ________ question. A) "how" B) "when" C) "who" D) "what" E) "where"

D) "what"

Refer to Table 3.4.1. If the price is $7, then the surplus is A) 160 units. B) 290 units. C) 400 units. D) 360 units. E) zero units.

D) 360 units

Which one of the following will definitely lower the equilibrium price? A) a decrease in both demand and supply B) an increase in both demand and supply C) an increase in demand combined with a decrease in supply D) a decrease in demand combined with an increase in supply E) a decrease in supply combined with an increase in demand Use the figure below to answer the following questions. Table 3.5.2 Demand and Supply Schedules for Cups of Coffee each day at CoolU

D) a decrease in demand combined with an increase in supply

Complete the following sentence. Macroeconomics A) is primarily concerned with the operation of individual markets in the economy. B) deals mainly with the economic behaviour of households. C) is the only part of economics to deal with government decisions. D) is the study of the national economy and the global economy. E) is primarily concerned with the behaviour of the stock market.

D) is the study of the national economy and the global economy.

In a world characterized by scarcity A) opportunity cost is zero. B) all goods are free. C) we are not limited by time. D) people must make choices among alternatives. E) individuals need not work to obtain goods.

D) people must make choices among alternatives.

If the demand curve is in Figure 3.5.1, A) a rise in price will shift the demand curve to . B) there is a shortage in the amount of - . C) price will rise. D) the equilibrium price is and the equilibrium quantity is . E) the equilibrium price is and the equilibrium quantity is .

D) the equilibrium price is and the equilibrium quantity is

The fact that a hockey star earns $3 million a year while a teacher earns $50,000 annually is an example of an economy facing the ________ question. A) "how" B) "where" C) "what" D) "when" E) "for whom"

E) "for whom"

Refer to Table 2.1.2. In moving from combination B to combination C, the opportunity cost of producing one additional unit of guns is A) 1/6 kilogram of butter. B) 2 kilograms of butter. C) 1/2 kilogram of butter. D) 6 kilograms of butter. E) 3 kilograms of butter.

E) 3 kilograms of butter.

Given the information in Table 2.4.2, can Sheila and Bruce gain by specialization? A) It depends on the wages each earns. B) Only if they are married to each other. C) No, not under the given circumstances. D) Yes, but only if Bruce gets paid more than Sheila. E) Yes, if each specializes in the good in which he has a comparative advantage.

E) Yes, if each specializes in the good in which he has a comparative advantage.

In Figure 2.2.1, when 2,000 bicycles are produced each month A) the marginal benefit from another bicycle is greater than the marginal cost of another bicycle. B) more bicycles must be produced to reach the efficient level of output. C) fewer bicycles must be produced to reach the efficient level of output. D) the economy is efficient at this level of production of bicycles. E) both A and B.

E) both A and B.

Debra has an absolute advantage in producing a good when she A) can produce the good at lower opportunity cost than anyone else. B) has exclusive rights to sell that good. C) has a comparative advantage in producing that good. D) has better technology than anyone else. E) can produce more of that good than anyone else, using the same quantity of inputs. Use the table below to answer the following questions. Table 2.4.2 Production for one week by Sheila and Bruce

E) can produce more of that good than anyone else, using the same quantity of inputs.

A vertical supply curve A) is impossible except in the long run. B) indicates a shortage of the good. C) implies an elasticity of supply equal to infinity. D) indicates that suppliers are unwilling to produce the good. E) implies an elasticity of supply equal to zero.

E) implies an elasticity of supply equal to zero.

A shift of the supply curve for rutabagas occurs if there is A) a change in the price of rutabagas. B) a change in the price of a related good that is a substitute for rutabagas. C) a change in income. D) a change in preferences for rutabagas. E) none of the above. Use the table below to answer the following questions. Table 3.4.1

E) none of the above.

Monika will choose to eat a seventh pizza slice if A) the marginal benefit from the seventh slice is less than its marginal cost. B) the total benefit from all seven slices is greater than their total cost. C) the total benefit from all seven slices is less than their total cost. D) she has enough money to pay for it. E) the marginal benefit from the seventh slice is greater than its marginal cost.

E) the marginal benefit from the seventh slice is greater than its marginal cost.

Scarcity confronts ________. A) the poor but not the rich B) neither the poor nor the rich C) families with incomes less than $25,000 a year D) the rich but not the poor E) the rich and the poor

E) the rich and the poor