Econ 2110 Exam 1
A change in quantity supplied is reflected by a movement along the same supply curve, while a change in supply refers to a shift in the entire supply curve. a. True b. False
a.
Below is a demand schedule and a supply schedule for kumquats: P, Qd, Qs 1, 101, 10 2, 87, 30 3, 76, 49 4, 58, 52 5, 45, 57 6, 33, 76 7, 12, 90 At what price is the quantity demanded greatest? At what price is quantity supplied greatest? a. 1, 7 b. 3, 5 c. 5, 3 d. 7, 1
a.
Consumer surplus is the amount that consumers: a. are willing to pay for a good minus what they actually pay for it. b. are willing to pay for a good. c. actually pay for a good. d. are willing to pay for a good plus the amount that they actually pay for it.
a.
If a scooter factory reduces its output from 20 to 19 scooters, its costs will fall from $2000 to $1900. The marginal cost of the 20th scooter is therefore a. $100 b. $1900 c. $2000 d. $3900 e. None of the above
a.
If supply decreases, ceteris paribus, the market price will be ______ at the new equilibrium point. a. Higher b. lower c. the same d. either higher or lower
a.
Mario buys 8 units of good X when his income is $2,000 a month. When his income increases to $2,700 per month, he buys only 10 units of good X. For Mario, good X is: a. a normal good. b. a good with few substitutes. c. an inferior good. d. a good of high value.
a.
Suppose France can produce four phones or three computers with one unit of labor, and Sweden can produce one phone or two computers with one unit of labor. If France can trade only with Sweden, then the theory of comparative advantage suggests that: a. France should specialize in producing phones and import computers from Sweden. b. France should specialize in producing computers and import phones from Sweden. c. France should produce both phones and computers, and import nothing from Sweden. d. France should import both phones and computers from Sweden.
a.
Traders should specialize in the good: a. that they can produce with the lowest opportunity cost. b. in which they have an absolute advantage. c. in which their trading partner has a comparative advantage. d. in which they do not have an absolute advantage.
a.
What happens in the market for ink when the price of lead used to make pencils rises? a. demand increases b. demand decreases c. supply increases d. supply decreases e. None of the above, because ink isn't used in lead
a.
When the unemployment rate rises, college enrollment tends to: a. rise. b. remain the same. c. fall. d. defy prediction.
a.
Which of the following would NOT lead to a decrease in the price of domestic automobiles? a. an increase in the price of foreign-made automobiles b. an economic recession, which decreases consumer income c. a decrease in the wages paid to union auto workers d. an increase in the number of domestic automakers
a.
questions: Austria and Albania each produce sleds and violins. In a day, an Austrian worker can produce 400 sleds or 2 violins. In a day, an Albanian worker can produce 100 tea chests or 1 violin. What is the cost of producing a tea chest in Albania? a. 1/100 of a violin b. 100 violin c. 1 violin d. 200 violins e. There is not enough information to answer
a.
As trade becomes more widespread, specialization ______, which in turn ______ productivity. a. decreases; decreases b. increases; increases c. decreases; increases d. increases; decreases
b.
At which of the following prices will the most kumquats actually be sold (i.e., change hands from seller to buyer)? a. 1 b. 3 c. 5 d. 7
b.
Bob's total benefit and total cost schedules for plates of fried clams are listed in the table below. Quantity(plates): 1,2,3,4,5,6,7,8,9 Total Benefits: 8,15,21,26,29,31,32,32,30 Total Costs : 4,8 ,12,16, 20,24,28,32,36 Which would leave Bob better off (measured as 'benefits fewer costs'), paying $25 for an "all the plates of clams you can eat" buffet, or paying $4 for each plate of clams? a. All you can eat b. $4 per plate c. Indifferent d. More information required
b.
For an inferior good, higher-income results in: a. an increase in demand. b. a decrease in demand. c. a movement up along the demand curve. d. a movement down along the demand curve.
b.
If equilibrium price in a market has risen from $10 to $25 and the equilibrium quantity has fallen from 50,000 to 35,000, we would know that a. demand has increased b. supply has decreased c. demand has decreased d. supply has increased e. both supply and demand have decreased
b.
If the market price is below the equilibrium price, which of the following will occur? a. Quantity demanded will exceed quantity supplied, and the market price will eventually fall. b. Quantity demanded will exceed quantity supplied, and the market price will eventually rise. c. Quantity supplied will exceed quantity demanded, and the market price will eventually fall. d. Quantity supplied will exceed quantity demanded, and the market price will eventually rise.
b.
In many universities, graduate students are employed to teach introductory undergraduate courses, even though the full professors at these universities have more experience and could potentially teach these courses better. Which of the following best explains why universities choose to hire graduate students instead of full professors to teach their introductory courses? a. Graduate students are cheaper. b. The opportunity cost of teaching an introductory course is higher for full professors than for graduate students. c. The opportunity cost of teaching an introductory course is higher for graduate students than for full professors. d. Introductory classes are the best place for graduate students to build their teaching skills.
b.
Jerome manages the local Nifty-wear rug cleaning service, which cleans rugs and carpets. He is employing marginal analysis when he compares a. the total revenue from cleaning Persian carpets to the total cost. b. the extra revenue from cleaning a few more Persian carpets to the extra cost. c. the average cost of cleaning carpets to the average cost of cleaning rugs, in order to specialize more efficiently. d. how much his cleaning service costs relative to that of his nearest competitor e. All of the above
b.
Suppose Bavaria and Prussia can produce the following amounts of pens and brooms per unit of labor: Bavaria Prussia Pens : 2 3 Brooms: 4 9 Name a trade and price that would make both Bavaria and Prussia better off. a. Prussia specializes in pens and trades 1 pen for 2.5 brooms. b. Bavaria specializes in pens and trades 1 pen for 2.5 brooms. c. Prussia specializes in brooms and trades 1 broom for 0.5 pens. d. Bavaria specializes in brooms and trades 1 broom for 0.5 pens.
b.
Suppose Bavaria and Prussia can produce the following amounts of pens and brooms per unit of labor: Bavaria Prussia Pens : 2 3 Brooms: 4 9 Which of the following is true? a. Prussia has the comparative advantage in pens and the absolute advantage in pens b. Prussia has the comparative advantage in brooms and the absolute advantage in brooms c. Bavaria has the comparative advantage in brooms and the absolute advantage in brooms d. Bavaria has the comparative advantage in pens and the absolute advantage in pens e. Both a and b
b.
The costs that influence decisions are always a. Average costs b. Marginal costs c. Sunk costs d. Total costs
b.
The equilibrium price will increase if demand and supply both increase by equal amounts. a. True b. False
b.
The real cost of producing a good is: a. the dollar cost of inputs used to make the item. b. the opportunity cost of producing the good. c. the resources that were used to make the good. d. the dollar amount it costs to sell the good.
b.
What would happen in the market for ramen noodles if the price of wheat (an input) falls while consumer income rises (ramen noodles are an inferior good)? a. The equilibrium price would increase, but the impact on quantity would be uncertain. b. The equilibrium price would decrease, but the impact on quantity would be uncertain. c. Both equilibrium price and quantity would decrease. d. The equilibrium quantity would increase but the impact on price would be uncertain. e. The equilibrium quantity would decrease but the impact on price would be uncertain.
b.
Which of the following would increase the demand for beef? a. lower pork prices b. higher consumer income c. higher prices of feed grains used to feed beef cattle d. an increase in the price of beef
b.
(Figure: Demand and Supply) Refer to the figure. Which statement is TRUE? a. The gains from trade are maximized at 20 units of output. b. At 16 units of output, there are unexploited gains from trade. c. Buyers are willing to pay $20 for the 16th unit of output and it costs sellers $60 to produce that unit. d. A free market is likely to produce less than 12 units of output.
c.
(Figure: Equilibrium) Refer to the figure. The equilibrium quantity (in units) is: a. 8. b. 10. c. 16. d. 12.
c.
(Table: Production Possibilities for the United States and Mexico) Using the table on production possibilities for the United States and Mexico, assume each country specializes in the good for which it has a comparative advantage. Which of the following answers identifies a trade price that both countries would find acceptable? (Units are in tons.) a. 0.2 potato for one corn < trade price < 5 corns for one potato b. 0.125 potato for one corn< trade price < 8 potatoes for one corn c. 5 corns for one potato < trade price < 8 corns for one potato d. 0.125 potato for one corn < trade price < 5 potatoes for one corn
c.
If you buy a motorcycle for $1000 and then discover that you hate riding it and will never ride it again, the best thing to do is a. keep the motorcycle because you've paid so much for it b. keep the motorcycle unless you can find someone who will pay you at least $1000 for it c. sell the motorcycle for the best offer you can get d. sell the motorcycle for the best offer you can get, as long as it covers most of what you paid for it
c.
Susan quits her administrative job, which pays $40,000 a year, to finish her 4-year college degree. Her annual college expenses are $8,000 for tuition; $900 for books; and $2,500 for food. The opportunity cost of attending college for the year is: a. $11,400. b. $8,900. c. $48,900. d. $51,400.
c.
questions: Austria and Albania each produce sleds and violins. In a day, an Austrian worker can produce 400 sleds or 2 violins. In a day, an Albanian worker can produce 100 tea chests or 1 violin. Which of the following is true? a. Austria has the comparative advantage in both violins and tea chests b. Austria has the comparative advantage in violins and Albania has the comparative advantage in tea chests c. Austria has the comparative advantage in tea chests and Albania has the comparative advantage in violins d. Albania has the absolute advantage in violins, but not in tea chests e. None of the above
c.
(Figure: Computers and Books) According to the figure, if country A produces only the good for which it has a comparative advantage and then consumes the other good by exchanging computers for books, then: a. country A will consume outside its PPF, but country B will consume inside its PPF. b. country A will consume inside its PPF, but country B will consume outside its PPF. c. both countries will consume inside their own PPFs. d. both countries will consume outside their own PPFs
d.
Bob's total benefit and total cost schedules for plates of fried clams are listed in the table below. Quantity(plates): 1,2,3,4,5,6,7,8,9 Total Benefits: 8,15,21,26,29,31,32,32,30 Total Costs : 4,8 ,12,16, 20,24,28,32,36 How many plates of clams will Bob consume in total? (Assume he employs the marginal principle.) a. 9 b. 8 or 7 c. 6 d. 4 e. None of the above
d.
Brazil can produce 1 unit of sugar cane for 1 unit of labor and one iPod for 8 units of labor, and China can produce 1 unit of sugar cane for 2 units of labor and one iPod for 4 units of labor. Which of the following is TRUE? a. Before trade, China's opportunity cost of one unit of sugar cane is two iPods. b. China has an absolute advantage in sugar cane production. c. Both parties benefit if they specialize and trade at terms of one unit of sugar cane for two iPods. d. With trade, Brazil should specialize in sugar cane and China in iPods
d.
Doug likes potatoes now more than he did last year. Therefore a. Doug must have received an increase in income b. potatoes must be a necessity c. the supply of potatoes has increased d. Doug is willing to pay more for potatoes than last year
d.
If you decide to go to a movie this evening rather than study economics, you thereby demonstrate that a. you don't care about getting good grades b. you hate economics c. you would rather have fun than fulfill your responsibilities d. at the margin, you value two hours of movie watching more than two hours of studying economics e. none of the above
d.
Scarcity is a situation in which a. something is being wasted b. something is on the verge of running out c. some people are poor and others are rich d. we are unable to satisfy all out wants e. All of the above
d.
Suppose that the supply of root beer (a complement) increases and the price of cream (an input) falls. What would you expect to happen to the market price and quantity of ice cream? a. The equilibrium price would increase, but the impact on equilibrium quantity would be uncertain. b. The equilibrium price would decrease, but the impact on equilibrium quantity would be uncertain. c. Both equilibrium price and quantity would increase. d. Equilibrium quantity would increase, but the impact on equilibrium price would be uncertain. e. Equilibrium quantity would decrease, but the impact on equilibrium price would be uncertain.
d.
The U.S. federal government spends $7 billion on airport security annually. It would be worth spending more only if a. doing so will save more lives b. after the additional spending, the total benefits from security spending are greater than the total costs. c. total benefits from security spending are currently less than the total costs d. the benefits of the additional safety are greater than the additional costs. e. under no conceivable circumstances
d.
The demand curve shows the relationship between: a. demand and supply. b. quantity demanded and quantity supplied. c. price and quantity supplied. d. price and quantity demanded.
d.
What is thinking on the margin? a. making decisions that are of noneconomic importance b. making choices that are based on historical precedents c. making choices that ignore the marginal benefits, but not the marginal costs, of some activity d. making choices by comparing the additional benefits and additional costs from doing a little bit more of some activity
d.
Which of the following is an example of self-interest that attempts to promote the public interest? a. A mother prevents her children from becoming vaccinated against measles, mumps, and rubella because of fears of autism. b. The president of the United States restricts American consumers from buying foreign-made products. c. The New York Yankees beat the Boston Red Sox. d. An entrepreneur risks his life savings to open up a grocery store in an underserved area.
d.
Bob's total benefit and total cost schedules for plates of fried clams are listed in the table below. Quantity(plates): 1,2,3,4,5,6,7,8,9 Total Benefits: 8,15,21,26,29,31,32,32,30 Total Costs : 4,8 ,12,16, 20,24,28,32,36 What is the marginal benefit to Bob of consuming a third plate of clams? a. 21 b. 15 c. 12 d. 9 e. 6
e.
If you paid $400 for a season pool pass at a private club, the marginal cost to you of swimming on any given weekday is a. $400 b. $10 if you swim 40 times c. $20 if the swim season lasts twenty weeks d. $3 if the swim season lasts twenty-one weeks and there are seven days in a week e. zero
e.
Which of the following are probably inferior goods? a. Mac and cheese b. Flip phones c. Riding the bus d. Only a and b e. All of the above
e.
Which of the following will increase the market price of chocolate eclairs? a. The discovery that chocolate causes cancer b. A much larger than expected chocolate crop c. A fall in the price of cupcakes (a substitute) d. A rise in the price of milk (a complement) e. None of the above
e.
How to find the total gains from trade at the free market equilibrium
the triangular area to the left of where lines cross (1/2BH)
How to find the value of wasted resources at a quantity
the triangular area to the right of where lines cross to specific quantity (1/2BH)