ECN 202: Midterm 1 (multiple choice/short answer)

_____ economics deals with "what is"

Positive

The definition of economics deals with how: a) scarce resources are allocated among competing ends. b) competing resources are allocated among scarce ends c) competing resources are allocated among tight ends d) scarce resources are allocated among scarce ends

A

The opportunity cost of something is the value of the a) next best alternative foregone b) second best alternative foregone c) Next worst alternative foregone d) whatever the accountants say it is c) both a & b

A

The points which are efficient in production are where on the frontier? a) on it b) below it c) to the right of it d) all points are producible

A

The problem of scarcity deals with: a) unlimited wants and limited resources b) limited wants and unlimited resources c) the problems of third world countries but not developed countries d) all countries and individuals on planet earth e) both a & d f) both b & d

A

In drawing the production possibilities frontier, we hold _____ constant? a) the quantity of resources b) the state of technology c) both a & b d) neither a nor b

C

The combinations of goods and services that cannot be produced are where on the frontier? a) on it b) below it c) to the right of it d) all points are producible

C

The slope of the PPF measures a) scarcity b) choice c) opportunity

C

Choose the best answer: a) macroeconomics deals with individual economic agents like household and business firms b) microeconomics deals with the economy as a whole, such as total production, inflation, etc. c) both a & b are true d) neither a nor b are true

D

Economic growth is depicted by an outward movement in PPF. This results from a) an increase in the supply of land, labor, or capital b) an increase in the level of technology c) when a & b occur together d) when a occurs or b occurs, but they don't have to be simultaneous.

D

Which is an example of capital? a) stocks b) bonds c) money d) bow & arrow

D

Which is not an economic resource? a) land b) labor c) capital d) stocks & bonds

D

Which of the following is not a fundamental question of economics? a) what? b) how? c) for whom? d) why

D

Less of good X is demanded at every possible price. How do we describe this event in terms of the demand curve? This is an increase in

Demand

The law of demand says that the higher the price charged for a product, Ceteris Paribus, the lower is the

Demand

An improvement in technology will cause the supply curve for a good to shift

Down

A rise in income will cause the price for an inferior good to _____ and the quantity to _____

Fall, fall

SUVs and gas are complementary goods. When gas prices rise sharply, the price of SUVs will _____ and quantity of SUVs will _____

Fall, fall

Steak is a normal good. A decrease in income will cause the price to _____ and the quantity to _____

Fall, fall

The phrase "ceteris paribus" means while other things are

Held constant

A decrease in income will cause the demand curve for a normal good to shift to the

Left

An increase in income will cause the demand curve for an inferior good to shift to the

Left

An increase in the price of steel will cause the supply curve for cars to shift to the

Left

Sirloin steaks and T-bone steaks at substitutes in consumption. A decrease in the price of T-bone steaks will shift the demand curve for sirloin steak to the

Left

Wage increases obtained by auto workers will cause the supply curve to shift to the

Left

"The present federal income tax system should be replaced with a national sales tax" this statement is an example of _____ economics

Normative

_____ economics deals with "how things ought to be"

Normative

During happy hour at the bar, the price of alcoholic drinks falls. This produces an increase in

Quantity demanded

The law of demand says that there is a negative relationship between price and

Quantity demanded

Apples and pears are substitutes. Supposed the price of pairs rises but the supply curve for apples does not shift. The price of apples will _____ and the quantity will _____

Rise, rise

"Wants are always greater than the ability to satisfy those wants." This describes

Scarcity

When resources are different, i.e. heterogeneous, is the PPF straight, or bow shaped?

bow shaped

If there is an increase in the numbers of buyers in a market, this will shift the demand curve for a product to the

right

Lettuce and salad dressing are complementary goods for consumers. A decrease in the price of lettuce will shift the demand curve for salad dressing to the

right