Eco 230 exam 1

If the United States lifts the embargo on Cuban products, what will happen in the U.S. market for Cuban cigars? A.The demand curve will shift to the left. B.The supply curve will shift to the left. C.The supply curve will shift to the right. D.The demand curve will shift to the right.

C.

When goods and services are produced at the lowest possible cost, ________ occurs. A.equity B.allocative efficiency C.productive efficiency D.efficient central planning

C.

Which of the following generates allocative efficiency in a market economy? A.national government intervention B.United Nations rules for competition C.voluntary exchange between buyers and sellers D.equity

C.

Economic models A.are simplified versions of reality. B.make no assumptions in order to remain as accurate as possible. C.can not be used to analyze real-world issues. D.magnify the complexity of economic issues in order to provide useful data.

A.

A worker is hired in a A.government market. B.goods and services market. C.factor market. D.product market.

C

Farmers can raise either goats or ostriches on their land. Which of the following would cause the supply of goats to decrease? A.an increase in the demand for goats B.a decrease in the price of goats C.an increase in the price of ostriches D.an increase in the price of ostrich feed

C.

Which of the following describes a characteristic of a perfectly competitive market? A.There are many sellers but few buyers. B.Equilibrium is achieved when demand for the product sold in the market equals the supply. C.There are many buyers and sellers. D.There are many buyers but few sellers.

C.

Suppose there is some unemployment in the economy and society decides that it wants more of one good. Which of the following statements is true? A.It will have to give up production and consumption of some other good. B.It is not possible to achieve this unless technology advances. C.It will have to increase resource supplies. D.It can increase output without giving up another good by employing more resources.

D.

How has the growing popularity of factory outlet stores affected the market for clothing at retail department stores? A.the demand curve for clothing at retail department stores shifts to the left. B.the supply curve for clothing at retail department stores shifts to the left. C.the demand curve for clothing at retail department stores shifts to the right. D.the supply curve for clothing at retail department stores shifts to the right.

A.

Hurricane Katrina damaged a large portion of oil refining and pipeline capacity in the Gulf coast states. In the market for gasoline A.the supply curve shifted to the left resulting in an increase in the equilibrium price. B.the demand curve shifted to the right resulting in an increase in the equilibrium price. C.the supply curve shifted to the right resulting in an increase in the equilibrium price. D.the demand curve shifted to the left resulting in a decrease in the equilibrium price.

A.

One would speak of a movement along a supply curve for a good, rather than a change in supply, if A.the price of the good changes. B.supplier expectations about future prices change. C.the cost of producing the good changes. D.prices of substitutes in production change.

A.

The circular flow model demonstrates A.the roles played by households and firms in the market system. B.the role of the government in overseeing the market system. C.how demand and supply for goods and services are brought into equilibrium. D.how shortages and surpluses are eliminated in a market.

A.

Which of the following contributes to the efficiency of markets? A.Markets promote competition and voluntary exchange. B.Markets promote equal standards of living. C.Governments play an active role in the day-to-day operations of markets. D.Markets are able to bring about an equitable distribution of goods and services.

A.

Which of the following is a microeconomic question? A.How does Fiat decide on the price of the 500 Pop model? B.What determines the level of U.S. imports and exports? C.When will the government better secure the borders? D.Why hasn't the federal government raised the minimum wage?

A.

Which of the following is a normative economic statement? A.Global warming should be at the top of every economic agenda. B.With falling mortgage rates and falling unemployment rates, the number of new homes being built has increased. C.Falling global demand for pesticides has led to decreases in the price of pesticides. D.The state of Florida's unemployment rate dropped when several large companies relocated to the Miami area.

A.

Which of the following is part of an economic model? Correct Answer A.data B.norms C.opinions D.preferences of economic agents

A.

A student comments to his roommate that the only way he will be able to pass his final exams is to not sleep for the next three days. This statement suggests that A.society should value good grades more highly than sleep because students can catch up on their sleep once final exams are over. B.there is a trade-off between studying and sleep. C.students are more concerned about good grades than good health. D.society should value sleep more highly than good grades.

B.

If the best lawyer in town is also the best at operating a word processor, then according to the theory of comparative advantage, this person should A.split her time evenly between being a lawyer and a word processor. B.specialize in being a lawyer because its opportunity cost is lower. C.should pursue the activity she enjoys more. D.specialize in being a word processor because it is more capital-intensive.

B.

Marginal cost is the ________ associated with a particular increase in an activity. A.opportunity cost B.additional cost C.forgone cost D.total cost

B.

Published in 1776, ________ was written by Adam Smith. "A.The Communist Manifesto" "B.An Inquiry into the Nature and Causes of the Wealth of Nations" "C.The Declaration of Economics" "D.The General Theory of Employment, Interest, and Money"

B.

Tabitha shares a flea market booth with her sister. Her share of the rent is $150 per month. She is considering moving to her own, larger booth which she will not have to share with anyone. The larger booth rents for $450 per month. Recently, you ran into Tabitha in the grocery store and she tells you that she has rented the larger booth. Tabitha is as rational as any other person. As an economics major, you rightly conclude that A.Tabitha figures that the additional benefit of having her own booth (as opposed to sharing) is at least $450. B.Tabitha figures that the additional benefit of having her own booth (as opposed to sharing) is at least $300. C.the cost of having one's own booth outweighs the benefits. D.Tabitha did not have a choice; her sister was overcharging her.

B.

The branch of economics which studies the behavior of entire economies and policies that affect the economy as a whole is called A.public economics. B.macroeconomics. C.microeconomics. D.normative economics.

B.

Which of the following would cause an increase in the equilibrium price and decrease in the equilibrium quantity of watermelon? A. a decrease in demand and an increase in supply B.a decrease in supply C.an increase in demand and an increase in supply D.an increase in demand and an increase in supply greater than the increase in demand

B.

________ occurs when economic benefits are distributed fairly. A.Equality B.Equity C.Productive efficiency D.Allocative efficiency

B.

A decrease in input costs in the production of LCD televisions caused the price of LCD televisions to decrease. Holding everything else constant, how would this affect the market for video game consoles (a complement to LCD televisions)? A.The demand for video game consoles would decrease and the equilibrium price of video game consoles would decrease. B.The demand for video game consoles would decrease because consumers could afford to buy fewer LCD televisions and video game consoles. C.The supply of video game consoles would increase and the equilibrium price of video game consoles would decrease. D.The demand for video game consoles would increase and the equilibrium price of video game consoles would increase.

D.

Because Coke and Pepsi are substitutes, a decrease in the price of Pepsi will cause the demand for Coke to decrease. This initial shift in demand for Coke results in a lower price for Coke; this lower price will cause the demand curve for Coke to shift to the left." Which of the following correctly comments on this statement? A.The statement is false because Pepsi is an inferior good; Coke is a normal good. B.The statement is false because one cannot assume that Coke and Pepsi are substitutes for all consumers. C.The statement will be true if consumer tastes for Coke and Pepsi do not change. D.The statement is false because a change in the price of Coke would not change the demand for Coke.

D.

Even when the demand for one good is high, the price of the good is also affected by supply. The textbook illustrates this by comparing the price of two items that were auctioned on the same day. Which of the following describes the results of the auction? A.A letter written by John Wilkes Booth sold for a higher price than a letter written by Lee Harvey Oswald. B.A letter written by Abraham Lincoln sold for a higher price than a letter written by John Wilkes Booth. C.A letter written by Abraham Lincoln was sold for a higher price than a letter written by Adam Smith. D.A letter written by John Wilkes Booth sold for a higher price than a letter written by Abraham Lincoln.

D.

How does the decreasing use of DVD players affect the market for prerecorded DVDs? A.The demand curve for prerecorded DVDs shifts to the right. B.The quantity of prerecorded DVDs demanded decreases. C.The quantity of prerecorded DVDs demanded increases. D.The demand curve for prerecorded DVDs shifts to the left.

D.

If an increase in income leads to an increase in the demand for sushi, then sushi is A.a neutral good. B.a necessity. C.a complement. D.a normal good.

D.

Which of the following statements about positive economic analysis is true? A.There is much more disagreement among economists over positive economic analysis than over normative economic analysis. B.There is much less disagreement among economists over normative economic analysis than over positive economic analysis. C.Unlike positive economic analysis, normative economic analysis can be tested. D.Positive analysis uses an economic model to estimate the costs and benefits of different course of actions.

D.