Economics 1st test questions
A restaurant manager has estimated that the price elasticity of demand for meals is 2. If the restaurant increases menu prices by 5%, she can expect the number of meals sold to decrease by _____ and total revenue to _____. A) 10 %; Fall B) 5%; Stay Constant C) 10%; Increase D) 2.5 %; Fall
Answer A
According to the data given in the exhibit 2-2 the production of 2 units of capital goods and 8 units of consumer goods; A) Is Possible but would be inefficient B) is not a possible combination because more resources are needed C) Implies that 6 consumer goods must be given up D) none of the above
Answer A
Apples and pears are substitute goods.All else equal if new fertilizer results in bountiful harvest of the nations apples, we predict that the equilibrium price of apples will ________________ and the equilibrium price of pears will____________. A) Fall, Fall B) Fall,Rise C) Rise, Rise D) Rise, Fall
Answer A
As shown in exhibit 21-2 the united states has a comparative advantage over mexico in: A) Wheat, but not in cloth B) Cloth, but not in wheat C) Both wheat and cloth D) Neither wheat nor cloth
Answer A
Given the market for bagels. If the price of cream cheese ( a complementary good ) decreases, at the same time that price of flour used to make bagels increases, what will happen to the equilibrium price and equilibrium quantity of bagels. A) Price rises, quantity indeterminate B) Price Falls, Quantity Falls C) Price Rises, Quantity rises D) Price of Indeterminate; Quantity Rises E)None of the above
Answer A
Look at the table Market for Apartments. If a government price ceiling of $900 is imposed on this market, an inefficiency will result will be an inefficiency in the form of a ______ million apartments. A) Shortage of 0.2 B) Shortage of 0.6 C) Surplus of 0.2 D) Surplus of 0.6 E) None of the above
Answer A
The table economics textbooks shows how much money for consumers would be willing to pay for a new economics textbook. If the price of the textbook is $100, what is the total consumer surplus received by these consumers? A) 125 B) 500 C) 100 D) 75 E) None of above
Answer A
Using the midpoints formula, what would be price elasticity of demand for a gallbladder operation if the number of operations fell from 6,000 to 4,000 per week after its price increased from $6,000 to $10,000? A) 0.80 B) 0.50 C) 0.20 D) 1.25 E) None of the above
Answer A
A college student is faced with a difficult decision of how to spend one hour this afternoon. She could work for her professors a research assistant and earn an hourly wage of $18. She could work as an ARC tutor at a wage of $12 or she could finish her economics homework assignment. If she chooses to complete her homework assignment, she has incurred an opportunity cost equal to: A) 30 B) 18 C) 12 D) 0 E) None of the above
Answer B
Consider the market for Harley Davidson motorcycles.If a dealer cuts prices by 10 percent and sells 20 percent more motorcycles,then the demand for motorcycles is; A)Inelastic, and total revenue will increase B) Elastic, and total revenue will increase C) Inelastic and total revenue will decrease D) Elastic and total revenue will decrease
Answer B
Consider the market for honeydew melon. If the supply of watermelon (a substitute) decreases, and at the same time good weather results in a bountiful harvest of honeydew melon, the equilibrium price of honeydew melon____________________ and the equilibrium quantity of honeydew melon _________. A) Rises; is indeterminate B) is indeterminate; Rises C) Falls; is indeterminate D) is indeterminate; Falls
Answer B
A survey indicated that apple pie is America's favorite pie. What will happen to the equilibrium price and equilibrium quantity of apple pie if the following events happen simultaneously: (a) the supply of cherries, a major ingredient in the production of cherry pie (a substitute) increases, and (b) the supply of apple pie falls. A) price definitely falls, quantity is indeterminate. B) quantity definitely falls, price is indeterminate. C) price definitely rises, quantity is indeterminate. D) quantity definitely rises, price is indeterminate
Answer C
Assume that hamburgers and french fries are complementary goods. A decrease in the price of beef, a major ingredient in hamburger production will cause the; A) Demand for hamburgers to increase B) Supply of hamburgers to increase C) Demand of french fries to increase D) Demand for french fries to decrease E) Supply of french fries to decrease
Answer C
Assume that pancakes and maple syrup are complements. What will happen to the equilibrium price and quantity of maple syrup if the price of flour used to make pancakes decreases? A) price and quantity of maple syrup falls. B) price of maple syrup falls and the quantity of maple syrup rises. C) price and quantity of maple syrup rises D) price of maple syrup rises and the quantity of maple syrup falls. E) none of the above
Answer C
If Herbert, the hair stylist, raises the price of his cuts from $13 to $15 and finds the number of cuts falls from 300 to 260, then the demand for Herbert's cuts in this range is A) Price Inelastic B) Price Elastic C) Unit Elastic D) Zero Elastic E) income Inelastic
Answer C
The table Producer Surplus and Phantom Tickets shows the minimum price at which each of the students is willing to sell a ticket to Phantom of the Opera. Assume that each student has only one ticket to sell. If the price for Phantom tickets is $55 and there is no other market for tickets, total producer surplus for these five students is: A) 54 B) 79 C) 84 D) 64 E) None of the above
Answer C
Use the graph to calculate consumer surplus when the market is at equilibrium. A) 4000 B) 5000 C) 2000 D) 3000 E) None of the above
Answer C
Which of the following best characterizes the circular flow of income? A) Households buy factors of production from businesses, and businesses buy goods and services from households B) The government purchases businesses and households. resources from businesses and households and then sells goods and services to C) Firms buy resources from households, and households use their income from the sale of resources to buy goods and services from firms. D) Firms buy resources from the government, and households buy goods and services from firms
Answer C
Look at the table Coffee and Salmon Production Possibilities. The table shows the maximum amounts of coffee and salmon that Brazil and Alaska can produce if they just produce one good. The opportunity cost of producing 1 unit of salmon for Alaska is: A) 2 Coffee B) 1/4 Coffee C) 1 Coffee D) 1/2 Coffee
Answer D
Marie is happy to see that the price of her favorite foo, corn cereals has fallen. Which of the following could be responsible? A) An decrease in the price of milk, a complement B) An increase in the supply of milk, a compliment C) A simultaneous increase in demand and decrease in supply of corn cereals D) A simultaneous increase in supply and decrease in demand for corn cereals
Answer D
Ramen noodles are considered an inferior good by the Adams family. If the family income falls, A) The demand curve for Ramen noodles shift to the left B)The supply Curve for Ramen noodles shifts to the right C)Both the demand curve and the supply curve shifts to the right D)The demand curve for Ramen noodles shift to the right E) Both the supply curve and the demand curve shifts to the left
Answer D
which of the following is not a factor of production? A) A caterpillar construction machine B) The services of a school teacher C)Ten acres of agricultural land D) One hundred thousand dollars E) All of the above are factors of production
Answer D
Examine the figure Sugar and Freight Trains. Suppose the economy is operating at point D. The opportunity cost of producing the combinations A would be: A) 224 tons of sugar B) 4 freight trains C) 144 tons of sugar D) 1 freight train E) None of the above
Answer E
In Exhibit 15-1, the production possibilities curves of wheat and corn for Nabia and Pada are presented. If these two nations trade, Nabia should specialize in the production of:a. wheat. A) Corn B) Corn and wheat. C) neither product since Pada has the comparative advantage in the production of both D) neither product since Pada has the absolute advantage in the production of both. E)Wheat
Answer E
In Exhibit 3-9, which of the following statements is true? A) At price $50, there is a surplus of 35. B) At price $20, there is a shortage of 40. C) At price $50, there is a shortage of 27. D) At price $20, there is a surplus of 26. E) None of the above is true
Answer E
Refer to Exhibit 2-2, the opportunity cost of producing combination b instead of combination D is A) 3 capital goods B) 1 Capital good C) 8 consumer goods D) 10 consumer goods E) None of the above
Answer E
Suppose that in June the price of a cup of coffee was 2.50 and 1200 lattes were consumed. In July the price of a cup of coffee was 2.25 and 1100 cups were consumed. What might have caused this change? A) The price of coffee beans ( an input of production of coffee) rose B) The price of tea ( a suterm-25bstitute for coffee) rose C) The price of coffee beans( An input of production of coffee) Fell D) The price of biscotti, a complement to coffee, fell E) The price tea ( A substitute for coffee) fell
Answer E
Excess quantity demanded for a good pressure to push the price of that good down toward the equilibrium price.
False
Higher Gasoline prices would likely raise the price of large, gas guzzling automobiles.
False
If cup a noodles is an inferior good, other things being equal, a decrease in consumer income will decrease the demand for a cup of noodles.
False
If the price elasticity of demand for a good is elastic, then consumers are relatively unresponsive with respect to the quantity purchased when the price changes.
False
If New York City expects that an increase in bus fares will raise mass transit revenues, it must think that the demand for bus travel is inelastic.
True
If the demand for apples falls at the same time the supply of apples rises, the price of apple will fall.
True
an effective or binding minimum wage legislation is a price floor that is set above the equilibrium price.
True