Micro Final OU EXAM 1

10) In the production possibility frontier depicted in the figure above, the bowed-out production possibilities frontier reflects __________ in the opportunity cost of bananas as more bananas are produced. A) increases B) no change C) decreases D) increases or decreases

a

12) In an hour, Cindy can make either 10 pizzas or 20 hoagies and Cal can make either 10 pizzas or 36 hoagies. Who has the comparative advantage in making pizzas? A) Cindy B) Cal C) Neither person D) Both persons

a

14) The quantity demanded of a good or service is the amount that A) consumers plan to buy during a given time period at a given price. B) a consumer would like to buy but might not be able to afford. C) is actually bought during a given time period at a given price. D) firms are willing to sell during a given time period at a given price.

a

14)In an hour, Andy can make either 5 pizzas or 12 pies and Chris can make either 6 pizzas or 18 pies.________ advantage in making pizzas.A)Andy has a comparativeB)Chris has a comparativeC)Andy has an absoluteD)None of the above answers is correct.

a

18) The figure above shows the demand for fruit snacks. Which movement reflects a decrease in quantity demanded but NOT a decrease in demand? A) from point a to point e B) from point a to point b C) from point a to point c D) from point a to point d

a

21) If an increase in the price of gasoline decreases the demand for movies, then A) gasoline and movies are complements in consumption. B) movies are an inferior good. C) gasoline is an inferior good. D) gasoline and movies are substitutes in consumption.

a

21)If a decrease in the price of gasoline increases the demand for large cars, thenA)gasoline and large cars are complements in consumption.B)large cars are an inferior good.C)gasoline is an inferior good.D)gasoline and large cars are substitutes in consumption.

a

23) Which of the following is NOT one of the factors that influences the supply of a product? A) income B) technology C) number of suppliers D) expected future prices

a

26) Which of the following explains why supply curves slope upward? A) increasing marginal cost B) substitutes in production and complements in production C) prices and income D) resources and technology

a

33) A local pizzeria raised its price from $9 to $11 for each pizza and the sales of its pizza decreased from 150 to 100 per day. The price elasticity of demand is _____ and it is _________ A) 2, elastic B) 1/2, inelastic C) -2, inelastic D) -1/2, inelastic

a

35)The price elasticity of demand measuresA)the responsiveness of the quantity demanded to changes in price.B)the slope of a budget curve.C)how often the price of a good changes.D)how sensitive the quantity demanded is to changes in demand.

a

5) When Al says, "Dr. Rogers is the best economics professor at OU," she is A) making a normative statement. B) describing her marginal benefit. C) making a positive statement. D) testing an economic model.

a

5)Which of the following is NOT part of the first big economic question?A)Why do incentives affect only marginal costs?B)How are goods and services produced?C)For whom are goods and services produced?D)What goods and services are produced?

a

8)Joe likes to sleep late in the mornings and play tennis in the afternoons. The opportunity cost of Joeattending his morning class for one hour isA)an hour of sleep given up.B)nothing because he is paying for his class.C)an hour of tennis given up.D)both the tennis given up and the sleep given up.

a

9)In the figure above, the point labeled C in the production possibilities frontierA)is unattainable; it is beyond the productive capability of this country.B)represents the maximum sustainable output level for this nation in the long run.C)represents a highly desirable output level in the long run, because it conserves scarce resources.D)represents either unemployed or inefficiently utilized resources.

a

Economics is best defined as the study of how people, businesses, governments, and societies A)make choices to cope with scarcity.B)choose abundance over scarcity.C)use their infinite resources.D)attain wealth.

a

11) In an hour, Cindy can make either 10 pizzas or 20 hoagies. Cindy's opportunity cost of producing one pizza is ? A) 1/2 hoagie B) 2 hoagies C) 10 hoagies D) 20 hoagies

b

12)Any production point outside the production possibilities frontier isA)attainable only if prices rise.B)unattainable.C)attainable only if prices fall.D)associated with unused resources.

b

13) In order to achieve the maximum gains from trade, people should specialize in the good for which they have A) both absolute and comparative advantage. B) comparative advantage. C) absolute advantage. D) highest opportunity cost.

b

15)In order to achieve the maximum gains from trade, people should specialize according toA)property rights.B)comparative advantage.C)absolute advantage.D)PPF.

b

16)The law of demand states that, other things remaining the same, the higher the price of a good, theA)larger is the quantity of the good demanded.B)smaller is the quantity of the good demanded.C)larger is the demand for the good.D)smaller is the demand for the good.

b

18)When the price of a pizza decreases from $14 to $12A)the income effect means that the demand for pizza will not change.B)the income effect points out that the total purchasing power of people who buy pizza increases.C)the income effect means people buy less pizza.D)None of the above answers is correct.

b

2)Microeconomics is the study of ________. A)all aspects of scarcityB)the choices that individuals & businesses makeC)the global economyD)the national economy

b

20) People buy more coffee when the price of tea rises. These goods are A) normal goods. B) substitutes. C) inferior goods. D) complements.

b

20)Which of the following influences people's buying plans (quantity demanded) and does not shift thedemand curve?A)preferencesB)the price of the goodC)incomeD)the prices of related goods

b

22) A recession occurs and people's incomes decrease. Knowing that a McDonald's Happy Meal is an inferior good, you predict that the demand for Happy Meals A) remains unchanged. B) increases. C) decreases. D) might increase or decrease

b

22)The price of a tomato increases and people buy more lettuce. You infer that lettuce and tomatoes are________.A)inferior goodsB)substitutesC)complementsD)normal goods

b

23)A recession occurs and people's incomes decrease. Knowing that an iPad is a normal good, you predictthat the demand for an iPadA)remains unchanged.B)decreases.C)increases.D)might increase or decrease.

b

24) In the figure above, an increase in the supply of oil would result in a movement from A) point a to point e. B) point a to point b. C) point a to point c. D) point a to point d.

b

26)A bakery can produce either cakes or cookies. If the price of cookies rises, thenA)there is a movement downward along the supply curve of cakes.B)the supply curve of cake shifts leftward.C)the supply curve of cake shifts rightward.D)there is a movement upward along the supply curve of cakes.

b

28)The figure above shows supply curves for soft drinks. Suppose the economy is at point a. A decrease in theprice of sugar used to make soft drinks is shown as a movement from point a to a point such asA)none of the points that are illustrated.B)point b.C)point c.D)point d.

b

3)Factors of production are grouped into four categoriesA)labor, capital, money, entrepreneurship.B)land, labor, capital, entrepreneurship.C)land, labor, capital, money.D)land, capital, money, entrepreneurship.

b

30) If both demand and supply decrease, what will be the effect on the equilibrium price and quantity? A) The price will rise but the quantity could either increase, decrease, or remain the same. B) The quantity will decrease but the price could either rise, fall, or remain the same. C) The price will rise but the quantity will decrease. D) Both the price and the quantity will decrease.

b

31)In the above figure, if the price is $8 then there is aA)shortage of 100.B)surplus of 200.C)shortage of 200.D)surplus of 100.

b

34)If both demand and supply increase, what will be the effect on the equilibrium price and quantity?A)The price will rise but the quantity could either increase, decrease, or remain the same.B)The quantity will increase but the price could either rise, fall, or remain the same.C)The price will fall but the quantity will increase.D)Both the price and the quantity will increase.

b

4) You decide to take a vacation and the trip costs you $2,000. While you are on vacation, you do not go to work where you could have earned $750. In terms of dollars, the opportunity cost of the vacation is A) $2,000. B) $2,750. C) $750. D) $1,250

b

6)Positive economic statementsA)prescribe what should be.B)can be tested against the facts.C)are related only to microeconomics.D)cannot be tested against the facts.

b

15) The law of demand implies that demand curves A) shift leftward whenever the price rises. B) slope up. C) slope down. D) shift rightward whenever the price rises.

c

16) Which of the following would NOT shift the demand curve for turkey? A) an increase in income B) a decrease in the price of ham C) a change in the price of a turkey D) a change in people's preferences for turkey

c

25)Because of increasing marginal cost, most supply curvesA)have a negative slope.B)are vertical.C)have a positive slope.D)are horizontal.

c

27) The above table shows the demand schedule and supply schedule for chocolate chip cookies. What is the equilibrium quantity and equilibrium price for chocolate chip cookies? A) 2 pounds, $6.00 per pound B) 2 pounds, $3.00 per pound C) 4 pounds, $5.00 per pound D) 7 pounds, $3.00 per pound

c

27)An increase in the number of suppliers in a market results in aA)leftward shift in the supply curve.B)movement up along the supply curve.C)rightward shift in the supply curve.D)Both answers A and C are correct.

c

3) Vic goes to college to become an economist. This is an example of an A) increase in labor. B) increase in entrepreneurship. C) investment in human capital. D) investment in physical capital.

c

31) The price elasticity of demand is calculated as the absolute value of the A) change in quantity demanded divided by the change in price. B) percentage change in price divided by the percentage change in quantity demanded. C) percentage change in quantity demanded divided by the percentage change in price. D) change in price divided by the change in quantity demanded.

c

32) A 10 percent increase in the quantity of spinach demanded results from a 20 percent decline in its price. The price elasticity of demand for spinach equals _____ and is _______ A) 20.0, elastic B) 2.0, elastic C) 0.5, inelastic D) 10.0, elastic

c

32)Between 2001 and 2015, equilibrium college tuition rose from $15,000 to $27,000 and equilibriumenrollment increased from 16 million to 21 million students. These changes could be the result ofA)a decrease in demand.B)a decrease in supply.C)an increase in demand.D)an increase in supply.

c

33)A decrease in the demand for beef because of concerns over cholesterol results inA)an increase in the supply of beef.B)higher beef prices.C)lower beef prices.D)an offsetting increase in the demand for beef if the price of beef falls.

c

35) Sliding down and to the right along a linear demand curve, the price elasticity of demand A) at first increases and then decreases. B) does not change. C) decreases. D) increases.

c

36) If demand for Jo's maple syrup is inelastic, then when Jo raises the price of maple syrup, her total revenue will A) decrease. B) stay the same. C) increase. D) probably change, but more information is needed to determine if the total revenue increases, decreases, or stays the same.

c

36)When the price of a movie ticket increases from $5 to $7, the quantity of tickets demanded decreases from600 to 400 a day. What is the price elasticity of demand for movie tickets?A)1.00B)0.83C)1.20D)2.32

c

37)If the price of a good increases from $3 to $4, and the quantity demand remains unchanged, then thedemand isA)somewhat elastic.B)infinite.C)perfectly inelastic.D)perfectly elastic.

c

38)If the price elasticity is between 0 and 1, demand isA)perfectly elastic.B)unit elastic.C)inelastic.D)elastic.

c

40)Moving up (to the left) along a linear demand curve, the price elasticity of demandA)at first increases and then decreases.B)does not change.C)increases.D)decreases.

c

7)Which of the following is a normative statement?A)Popcorn and candy are sold in movie theaters.B)The price of candy bars is $1.25 each.C)You should eat less candy.D)Candy bars are more expensive than newspapers.

c

1) Scarcity exists because A) society and people are greedy and wasteful. B) poor people need more food and other goods. C) of the inefficient choices we make. D) our wants exceed the resources available to satisfy them.

d

10)In the figure above, the PPF bows outward due toA)decreasing opportunity cost.B)improvements in technology.C)falling productivity.D)increasing opportunity cost.

d

11)Any point on a production possibilities frontier (PPF) itself isA)unattainable.B)equitable.C)inefficient.D)production efficient.

d

13)Betty and Ann live on a desert island. With a day's labor, Ann can produce 8 fish or 4 coconuts; Betty canproduce 6 fish or 2 coconuts. Ann's opportunity cost of producing 1 coconut is ________ and she shouldspecialize in the production of ________.A)8 fish per coconut; fishB)6 fish per coconut; coconutsC)0 fish per coconut; coconutsD)2 fish per coconut; coconuts

d

17) The figure above shows the demand for fruit snacks. Which movement reflects an increase in demand? A) from point a to point e B) from point a to point b C) from point a to point c D) from point a to point d

d

17)Each point on the demand curve reflectsA)the highest price sellers will accept for all units they are producing.B)the lowest-cost technology available to produce a good.C)all the wants of a given household.D)the highest price consumers are willing and able to pay for that particular unit of a good.

d

19) If the price of chocolate chip cookies rises, then A) there is a movement downward along the demand curve for chocolate chip cookies. B) the demand curve for chocolate chip cookies shifts rightward. C) the demand curve for chocolate chip cookies shifts leftward. D) there is a movement upward along the demand curve for chocolate chip cookies

d

19)For normal goods which of the following explains why demand curves slope downward?A)substitutes and complementsB)resources and technologyC)prices and incomeD)substitution effect and income effect

d

2) The study of the decisions of individual units in the economy is known as A) the study of incentives. B) macroeconomics. C) ceteris paribus study. D) microeconomics.

d

24)The quantity supplied of a good or service is the quantity that a producer ________ at a particular priceduring a given time period.A)should sellB)needs to sellC)actually sellsD)is willing to sell

d

25) In the figure above, which movement could be the result of an increase in the wages paid to oil workers? A) point a to point e B) point a to point b C) point a to point c D) point a to point d

d

28) The above table shows the demand schedule and supply schedule for chocolate chip cookies. If the price is $4.00 per pound, there is a A) shortage of 2 pounds of chocolate chip cookies. B) surplus of 3 pounds of chocolate chip cookies. C) shortage of 5 pounds of chocolate chip cookies. D) shortage of 3 pounds of chocolate chip cookies.

d

29) The demand and supply curves for OU Hoodies in Norman, Oklahoma , are given by the following equations: Qd= 10- P Qs = 2 + P Where P is measured in dollars and Q is the number of shirts sold per year. The equilibrium price is _________and the equilibrium quantity is___________. A) P=2,Q=8 B) P=8,Q=2 C) P=6, Q=4 D) P=4,Q=6

d

29)The demand and supply curves for OU tents in Norman, Oklahoma , are given by the following equations:Q d= 18- P Qs =-2 + PWhere P is measured in dollars and Q is the number of shirts sold per year.The equilibrium price is _________and the equilibrium quantity is___________.A)8,20B)8,10C)10, 12D)10,8

d

30)Which of the following is the best way to describe equilibrium in a market? At equilibrium, theA)price is usually affordable to most people.B)price is the lowest possible.C)supply and demand curves can never shift again.D)quantity supplied equals the quantity demanded.

d

34) Which goods have have less ELASTIC demands (e.g., are more INELASTIC)? A) goods which are luxuries B) goods with many substitutes C) goods whose purchase represents a large percentage of income D) goods with few substitutes

d

39)Which goods have more elastic demands?A)goods which are necessitiesB)goods with few substitutesC)goods whose purchase represents a small percentage of incomeD)goods with many substitutes

d

4)The fact that people with higher incomes get to consume more goods and services addresses the ________part of one of the two big economic questions.A)"when"B)"where"C)"how"D)"for whom"

d

6) Which of the following is a positive economic statement? A) Dr. Rogers is the most engaging professor at OU. B) Dr. Ellis should teach more like Dr. Rogers. C) Dr. Rogers deserves a Nobel Prize. D) On average 40% of Dr. Rogers' students earn a B grade or better.

d

7) In the production possibilities frontier depicted in the figure above, which of the following combinations of hats and bananas is unattainable? A) 0 pounds of bananas and 6 million hats B) 2 million pounds of bananas and 5 million hats C) 1 million pounds of bananas and 3 million hats D) 4 million pounds of bananas and 4 million hats

d

8) In the production possibilities frontier depicted in the figure above, which of the following combinations of hats and bananas is inefficient? A) 2 million pounds of bananas and 5 million hats B) 0 pounds of bananas and 6 million hats C) 4 million pounds of bananas and 4 million hats D) 1 million pounds of bananas and 3 million hats

d

9) In the production possibilities frontier depicted in the figure above, what is the opportunity cost of increasing the production of bananas from two million pounds to three million pounds? A) 3 hats per pound of bananas B) 1/2 hat per pound of bananas C) 2 hats per pound of bananas D) 1 hat per pound of bananas

d