ECON 1B Spring 2021 Midterm

Refer to Figure 2-3 . I t is not possible for this economy to produce at point

C

Refer to Figure 4-2. If these are the only two consumers in the market, then the market quantity demanded at a price of $15 is

0 units

Refer to Table 2-3. Which of the following combinations of corn and wheat is not currently attainable but would be attainable if there was an improvement in overall production technology?

1,000 bushels of corn and 2,200 bushels of wheat

Refer to Table 2-2 . What is the opportunity cost to Footville of increasing the production of shoes from 400 to 600?

300 socks

Who is the economist credited with first drawing supply and demand curves as we use today?

Alfred Marshall Adam Smith David Ricardo Karl Marx

Suppose an economy produces two goods, food and machines. This economy always operates on its production possibilities frontier. Last year, it produced 1,000 units of food and 47 machines. This year it experienced a technological advance in its machine-making industry. As a result, this year the society wants to produce 1,050 units of food and 47 machines. Which of the following statements is correct?

Because the technological advance occurred in the machine-making industry, it will not be possible to increase food production without reducing machine production below 47

Suppose there is a flood in St. Louis, Missouri, that destroys several beer bottling facilities. Which of the following would not be a direct result of this event?

Buyers would not be willing to buy as much as before at each relevant price

Opportunity costs are measured as what is gained divided by what is given up.

False

Price will rise to eliminate a surplus.

False

When a production possibilities frontier is bowed outward, the opportunity cost of one good in terms of the other is constant.

False

Which of the following do not explain why the demand curve slopes downward?

Law of Demand Substitution Effect Income Effect

Refer to Figure 4-10. Which of the following movements would illustrate the effect in the market for bullet-proof vests of an increase in the price of Kevlar, the material used to make the vests?

Point C to Point D

Which of the following is not held constant in a demand schedule?

Price

Which of the following would shift the supply of Green Bay Packers football jerseys to the left?

The cost of the fabric used to make the jerseys increases

Which of the following would likely be studied by a microeconomist rather than a macroeconomist?

The effect of a sales tax on the cigarette industry

What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce them?

The equilibrium price would decrease, and the equilibrium quantity would increase

Refer to Figure 2-3. Suppose this economy is producing at point D. Which of the following statements would best explain this situation?

There is widespread unemployment in the economy

A decrease in the price of peanut butter will increase both the equilibrium price and quantity in the market for jelly.

True

Refer to Figure 2-10. It is possible for this economy to produce 30 doghouses and 20 dishwashers.

True

The government can potentially improve market outcomes if market inequalities or market failure exists.

True

If the demand for a good falls when income falls, then the good is called

a normal good

If the demand for a product increases, then we would expect equilibrium price

and equilibrium quantity both to increase

An increase in the price of a good will

decrease quantity demanded

Economists make assumptions to

focus their thinking on the essence of the problem at hand

The basic principles of economics suggest that

government should become involved in markets when those markets fail to produce efficient or fair outcomes

An economy's production of two goods is efficient if

it is impossible to produce more of one good without producing less of the other

When recommending specific policies to undertake, economists make

normative statements

The adage, "There ain't no such thing as a free lunch," means

people face tradeoffs

The use of theory and observation is more difficult in economics than in sciences such as physics due to the difficulty in

performing an experiment in an economic system

Refer to Figure 2-4, Graph (a) . Production is

possible at points J, K, L, and M, but efficient only at points J, L, and M

What term refers to the idea that society has limited resources and therefore cannot produce all the goods and services people wish to have?

scarcity

Refer to Figure 4-7. At a price of $35, there would be a

surplus of 400 units

A baker recently has come to expect higher prices for bread in the near future. We would expect

the baker to supply less bread now than she was supplying previously