ECON 2143- Exam 1 Questions
When the price of a cup of coffee falls from $3 to $2.50, the quantity demanded increases from 1,000 per month to 1,150 per month. Using the midpoint method, the price elasticity of demand is: A. 0.77 B. 1.30 C. 0.07 D. 3.00 E. 2.50
A. 0.77
Which of the following BEST describes macroeconomics? A. It analyzes the aggregate effects on the national economy of the choices made by individuals, firms, and governments. B. It studies the choices that individuals and businesses make when coping with scarcity. C. It examines how the choices that individuals make affects government. D. It is not a social science because its predictions cannot be tested. E. Proving causation is never a problem for macroeconomics.
A. It analyzes the aggregate effects on the national economy of the choices made by individuals, firms, and governments.
Which of the following explains why supply is more elastic as more time passes? A. It is difficult or impossible to increase the quantity produced in a short period of time. B. The supply curve becomes generally steeper as more time passes. C. Sellers try to take advantage of a high price in the short term. D. Consumers have more time to search for substitutes E. There is no explanation for this phenomenon.
A. It is difficult or impossible to increase the quantity produced in a short period of time.
Suppose India and France start off on PPF0, but at different production points, shown in the figure. Based on their current production points, relative to France, which is India's most likely future PPF? A. PPF2 with France on PPF1. B. PPF1 with France on PPF1 . C. PPF0 with France on PPF1. D. PPF1 with France on PPF2. E. None of the above because economic growth will not happen in India.
A. PPF2 with France on PPF1.
Oil refiners can refine a barrel of petroleum so that it yields either more home heating oil or more diesel fuel. If the price of diesel fuel falls, there is A. an increase in the supply of home heating oil. B. an increase in the quantity of home heating oil supplied. C. an increase in the demand for home heating oil. D. a decrease in the quantity of home heating oil supplied. E. a decrease in the supply of home heating oil.
A. an increase in the supply of home heating oil.
The figure above shows a nation's PPF. In the figure, point B shows: A. an unattainable point B. an attainable point C. a point of a free lunch D. a point with not trade off E. a point at which there are unemployed resources
A. an unattainable point
Consider the United States' production of soy beans and running shoes. If the US has an absolute advantage in the production of both goods compared to china, A. both countries can gain from trade. B. only the US will gain from trade. C. only China can gain from trade. D. each country will be able to produce at a point beyond its PPF. E. only the US will be able to operate beyond its PPF.
A. both countries can gain from trade.
If workers in Mexico produce fewer goods and services per hour than workers in the United States in all areas of production, then: A. both the United States and Mexico will benefit from trade with the other. B. the United States will benefit from trade with Mexico but Mexico will not. C. it is unknown whether either country can benefit from trade with the other. D. neither Mexico nor the United States will benefit from trade with the other. E. Mexico will benefit from trade with the United States but the United States will not.
A. both the United States and Mexico will benefit from trade with the other.
Car insurance and cars are complements. If the price of car insurance increases, the A. demand for cars decreases. B. quantity of cars demanded increases. C. demand for cars increases. D. quantity of cars demanded decreases. E. More information is needed to determine if the demand increases or decreases.
A. demand for cars decreases.
Mandy saved her allowance to buy a 12 pack of cream soda. When Mandy's brother saw the soda, he took four. Sodas were allocated between Mandy and her brother through: A. force. B. majority rule. C. first-come, first-served. D. sharing equally. E. personal characteristics.
A. force.
Suppose a good can be produced using commonly available resources. The elasticity of supply is A. greater than 1. B. negative. C. greater than zero but less than 1. D. zero. E. More information is needed to make a determination about the size of the elasticity of supply.
A. greater than 1.
Scarcity exists because: A. human wants exceed the resources available to satisfy them. B. some individuals have low income. C. the costs of production are high. D. some people make bad economic decisions. E. people take too much leisure time.
A. human wants exceed the resources available to satisfy them.
When the percentage change in the quantity demanded is less than the percentage change in price, then demand is A. inelastic. B. elastic. C. unit elastic. D. irrelevant. E. undefined.
A. inelastic.
As an economy grows, A. its PPF shifts outward. B. it can eliminate scarcity. C. its PPF does not shift; instead, the production point moves from inside the PPF to be closer to the PPF. D. the opportunity cost of production will approach 0. E. the opportunity cost of production will increase.
A. its PPF shifts outward.
An increase in the quantity demanded is shown as a: A. movement along the demand curve. B. rightward shift of the demand curve. C. leftward shift of the demand curve. D. movement toward the demand curve. E. both a movement along the demand curve and a shift of the demand curve.
A. movement along the demand curve.
Specialization and trade make a country better off because with trade, the country can consume at a point: A. outside of its PPF. B. inside of its PPF. C. on its PPF. D. on its trading partner's PPF. E. inside of its trading partner's PPF.
A. outside of its PPF.
As the economy increasingly specializes in producing one good, the opportunity cost of that good increases. This happens because: A. resources are not equally productive in all activities. B. what must be paid to resources increases. C. human wants are virtually unlimited. D. not all goods are equally valuable. E. as more of a good is produced, the profit from its productions must rise.
A. resources are not equally productive in all activities.
If the price elasticity of supply for a good is 0.75, then A. the percentage change in the quantity supplied is less than the percentage change in price. B. an increase in the price boosts the quantity supplied by a larger percentage. C. the supply is inelastic so the demand must also be inelastic. D. the supply is elastic. E. None of the above answers is correct.
A. the percentage change in the quantity supplied is less than the percentage change in price.
A price ceiling in the market for gasoline that is below the equilibrium price will lead to: A. the quantity demanded of gasoline exceeding the quantity supplied. B. an increase in the demand for gasoline. C. a decrease in the supply of gasoline. D. the quantity supplied of gasoline exceeding the quantity demanded. E. no change in the market since the price ceiling in below equilibrium price.
A. the quantity demanded of gasoline exceeding the quantity supplied.
The figure above shows the production possibilities frontiers for the United Kingdom and France. If the United Kingdom and France specialize and engage in trade, the United Kingdom will export ________ and France will export ________. A. fish; wheat B. wheat; fish C. nothing; nothing D. wheat; wheat E. fish; fish
A. fish; wheat
Which of the following best defines economics? A. Economics teaches how to limit our wants. B. Economics studies how to choose the best alternative when coping with scarcity. C. Economics helps you earn as much money as possible. D. Economics analyzes all aspects of human behavior in general. E. Economics is concerned with prices and quantities of goods and services, both the individual level and at the industry level.
B. Economics studies how to choose the best alternative when coping with scarcity.
Mac can bake more cookies than Monica per hour. It must be true that: A. Monica has an absolute advantage in cookie baking. B. Mac has an absolute advantage in baking cookies. C. Mac has a comparative advantage in baking cookies. D. Monica has a comparative advantage in baking cookies. E. Mac cannot benefit by trade between the two of them.
B. Mac has an absolute advantage in baking cookies.
Of the following, which good has the most elastic demand? A. breakfast food B. Post Raisin Brand purchased at a Safeway grocery store C. food D. cereal E. Post Raisin Bran
B. Post Raisin Brand purchased at a Safeway grocery store
Which of the following is a microeconomic issue? A. The Brazilian economy experiences rapid economic growth. B. The price of gasoline increases in the United States this year. C. The U.S. government cuts taxes to combat a recession. D. Inflation skyrockets in Russia. E. The unemployment rate soars in Spain.
B. The price of gasoline increases in the United States this year.
Consider the market for smart phones. Which of the following shifts the demand curve rightward? A. a decrease in the price of smart phones B. an increase in the price of land−line phone service, a substitute for smart phones C. an increase in the price of smart phones D. an increase in the supply of smart phones. E. a decrease in the number of smart phone buyers
B. an increase in the price of land−line phone service, a substitute for smart phones
In the above figure, if the quantity is equal to 2,500,000 units, the deadweight loss is equal to: A. area B + area F B. area D + area I C. area C D. area G + area H E. None of the above answers is correct because the deadweight loss is equal to zero.
B. area D + area I
If a lower price for a Pepsi decreases the demand for a Coke, the cross elasticity value for Pepsi and Coke is A. definitely equal to zero. B. definitely positive. C. definitely greater than one. D. definitely negative. E. possibly negative, positive, or zero, but there is not enough information to decide.
B. definitely positive.
Soda and hot dogs are complements for one another. If a shortage of carbonated water leads to an increase in the price of soda, then the A. demand for hot dogs increases. B. demand for hot dogs decreases. C. quantity of hot dogs demanded increases. D. quantity of hot dogs demanded decreases. E. More information is needed to determine if the demand increases or decreases.
B. demand for hot dogs decreases.
Which of the following is most likely to have an income elasticity of demand that is less than 1? A. movies B. food C. foreign travel D. airline travel E. restaurant meals
B. food
If the income elasticity of demand for a good is 2, then when income rises 10 percent, the quantity demanded A. increases 2 percent. B. increases 20 percent. C. decreases 2 percent. D. decreases 20 percent. E. increases 12 percent.
B. increases 20 percent.
Neither the demand nor the supply of automobiles is perfectly elastic or inelastic. If the government imposes a $1,000 tax on automobiles, then the price of an automobile buyers pay: A. increases by $1,000. B. increases by less than $1,000. C. increases by more than $1,000. D. decreases by $1,000. E. does not change.
B. increases by less than $1,000.
If the percentage change in price is 10% and the demand is elastic, then the percentage change in the quantity demanded: A. is greater than 0 % but less than 10 % B. is larger than 10% C. equals 0% D. equals 10 % E. More information is required to determine the magnitude of the change in the quantity demanded.
B. is larger than 10%
When a society achieves allocative efficiency, it: A. is not achieving production efficiency. B. is producing that combination of goods and services that society values most highly. C. might or might not be producing at a point on the society's PPF. D. is producing a combination of goods and services whose marginal cost exceeds their marginal benefit. E. is producing the combination of goods and services for which marginal benefit exceeds marginal cost by as much as possible.
B. is producing that combination of goods and services that society values most highly.
Because of a sharp increase in the price of gasoline, the demand for Sports Utility vehicles (SUVs) has decreased. So, the high price of gasoline leads to a: A. leftward shift of the demand curve for SUVs and the supply curve of SUVs. B. leftward shift of the demand curve for SUVs and no shift in the supply curve. C. leftward shift of the demand curve for SUVs and a rightward shift in the supply curve. D. leftward shift of the supply curve of SUVs and no shift in the demand curve. E. rightward shift in the supply curve of SUVs and no shift in the demand curve.
B. leftward shift of the demand curve for SUVs and no shift in the supply curve.
When Gabriel made a rational choice to spend his entire allowance on candy bars, he did so by comparing the: A. benefits of the candy bars to the desires he had for candy bars. B. marginal benefits of the candy bars to the marginal costs of the candy bars. C. opportunity costs of the candy bars to the scarcity of the candy bars. D. benefits of the candy bars to the scarcity candy bars. E. self-interest to the social interest.
B. marginal benefits of the candy bars to the marginal costs of the candy bars.
Suppose the equilibrium price of a gallon of milk is $4. If the government imposes a price floor of $5 per gallon of milk, the: A. quantity supplied of milk falls short of the quantity demanded. B. quantity supplied of milk exceeds the quantity demanded. C. supply increases. D. demand decreases. E. price of milk remains $4 per gallon.
B. quantity supplied of milk exceeds the quantity demanded.
Gains from trade: A. occur when one party to the trade has an absolute advantage in both goods. B. result in being able to consume beyond the trading individuals' production possibilities frontiers. C. occur when people do not specialize. D. occur when opportunity costs are equal. E. always benefit one party but not the other party of any trade.
B. result in being able to consume beyond the trading individuals' production possibilities frontiers.
Consider the market for cellular phones. Which of the following shifts the demand curve leftward? A. a decrease in the quantity demanded of cellular phones B. studies showing using cellular phones can cause brain cancer C. an increase in the services provided by cellular phones, such as text messaging D. a decrease in the price of cellular phones E. an increase in the price of cellular phones
B. studies showing using cellular phones can cause brain cancer
If the price of a Brita water filtration system increases and the quantity demanded of bottled water increases, then these two goods are A. inferior goods. B. substitutes. C. complements. D. inelastic goods. E. normal goods.
B. substitutes.
Which of the following is a topic studied in macroeconomics? A. the pricing decisions in the computer industry. B. the effect on economic growth if the government raises taxes. C. how the wheat industry determines how much wheat to grow. D. the impact of labor unions on wages. E. the impact of higher prices for gasoline on the number of SUVs people buy.
B. the effect on economic growth if the government raises taxes.
The primary focus of microeconomics is: A. to examine the operation of the entire (aggregate) economy. B. to examine the behavior and operation of the individual units or sectors that make up the economy. C. our government's monetary policy. D. the levels of employment and inflation. E. to study how we managed to eliminate scarcity.
B. to examine the behavior and operation of the individual units or sectors that make up the economy.
In the figure above, if pizza production increases to 15,000 pizzas a day, the deadweight loss is: A. $45,000 per day. B. $12,500 per day. C. $22,500 per day. D. $90,000 per day. E. zero.
C. $22,500 per day.
The figure above shows the market for tires. The figure shows that the government has imposed a tax of _______ per tire and that _______ pay most of the tax. A. $30; buyers. B. $40; buyers. C. $30; sellers. D. $60; sellers. E. $60; buyers.
C. $30; sellers.
The figure above represents the competitive market for slices of key lime pie. When the price is $3, the total consumer surplus equals: A. $120. B. $90. C. $60. D. $0. E. None of the above answers is correct.
C. $60.
The figure above represents the competitive market for slices of key lime pie. When the price is $3, the total producer surplus equals: A. $0. B. $60. C. $90. D. $120. E. None of the above answers are correct.
C. $90.
On a PPF, 500 pounds of apples and 1,200 pounds of bananas can be produced while at another point on the same frontier, 300 pounds of apples and 1,300 pounds of bananas can be produced. Between these points, what is the opportunity cost of producing a pound of bananas? A. 2 pounds of bananas. B. 200 pounds of bananas. C. 2 pounds of apples. D. 0.5 pounds of apples. E. 2.4 pounds of apples.
C. 2 pounds of apples.
The data in the table above give two points on the demand curve for pizza. Using the midpoint method, when the price of a pizza falls from $10 to $9, what is the percentage change in the quantity demanded? A. 15.5 percent B. 10.0 percent C. 22.2 percent D. 5.2 percent E. 25 percent
C. 22.2 percent
David takes 10 minutes to process a customer, and 20 minutes to stock the shelves. Danny takes 15 minutes to process a customer, and 15 minutes to stock the shelves. Which of the following statements is true? A. David has an absolute advantage in performing both tasks. B. Danny has an absolute advantage in performing both tasks. C. David has the comparative advantage in processing customers but not stocking shelves. D. Danny has the comparative advantage in processing customers but not in stocking shelves. E. Danny has the comparative advantage in processing customers and in stocking shelves.
C. David has the comparative advantage in processing customers but not stocking shelves.
The above figure shows the PPF for a country that produces computers and computer factories. Which of the following would most likely shift the PPF from PPFo in one year to PPF1 in the next? A. Nothing, because the PPF does not shift. B. Increase the production of computers from 9 million to 11 million. C. Decrease the production of computers from 11 million to 9 million and build 9 new computer factories. D. Increase consumption of both computers and computer factories. E. Decrease production of both computers and computer factories by moving into the interior of the PPF.
C. Decrease the production of computers from 11 million to 9 million and build 9 new computer factories.
Which of the following is true? A. If the price of a substitute rises, the demand curve shifts leftward. B. If people expect the price of a good will rise in the future, the demand curve shifts leftward. C. For an inferior good, when income increases, the demand curve shifts leftward. D. An increase in population shifts the demand curve leftward. E. An increase in the cost of producing a good shifts the demand curve leftward.
C. For an inferior good, when income increases, the demand curve shifts leftward.
Which of the following is a topic studied in macroeconomics? A. The pricing decisions in the computer hardware industry. B. The impact of labor unions on wages. C. The effect on economic growth if the government raises taxes. D. The impact of higher prices for gasoline on the number of SUVs people buy. E. How the wheat industry determines how much wheat to grow.
C. The effect on economic growth if the government raises taxes.
People take fewer trips by airplane when their incomes fall because of the recession. Trips by airplane must be A. a substitute for other goods. B. an inferior good. C. a normal good. D. an inelastic good. E. a complement to other goods.
C. a normal good.
A statement that "All children should receive free health care" is an example of what kind of statement? A. a positive statement B. a natural experiment statement C. a normative statement D. a fair statement E. a statement on the margin
C. a normative statement
A price floor in an agricultural market is called: A. an agricultural floor. B. a farm support. C. a price support. D. a farm subsidy. E. a farm support price.
C. a price support.
In the figure above, a price of $35 per dozen roses results in: A. a shortage. B. equilibrium. C. a surplus. D. upward pressure on the price of roses. E. an eventual rightward shift of the demand curve and/or leftward shift of the supply curve.
C. a surplus.
The opportunity cost of producing a good rises only slightly as the quantity produces increases. This good has : A. an inelastic demand. B. an elastic demand. C. an elastic supply. D. an inelastic supply. E. a perfectly elastic supply.
C. an elastic supply.
Production efficiency occurs: A. anywhere inside or on the PPF. B. when the total cost of production is minimized. C. at all points on the PPF. D. at only one point on the PPF. E. at all points inside the PPF.
C. at all points on the PPF.
With no international trade, a country ________ consume at a point outside of its PPF; with international trade, a country ________ consume at a point outside of its PPF. A. can; cannot B. cannot; cannot C. cannot; can D. can; can E. None of the above answers are correct because the presence or absence of international trade has nothing to do with where a country consumes in comparison to its PPF.
C. cannot; can
If the price of a one good increases and the quantity demanded of a different good decreases, then these two goods are A. normal goods. B. substitutes. C. complements. D. inelastic goods. E. inferior goods.
C. complements.
The law of supply states that, other things remaining the same, A. if the price of a good increases, firms buy less of it. B. demand increases when supply increases. C. if the price of a good increases, the quantity supplied increases. D. if the price of a good increases, the supply increases. E. as people's income increase, the supply of goods increases.
C. if the price of a good increases, the quantity supplied increases.
The marginal cost of an activity ________ as you do more of it. A. changes only if the marginal benefit of the activity does not change B. doesn't change C. increases D. decreases E. changes only if the marginal benefit of the activity changes
C. increases
Moving from one point to another on a production possibilities frontier implies A. increasing the production of both goods. B. holding the production levels of both goods constant. C. increasing the production of one good and decreasing the production of another. D. decreasing the production of both goods. E. changing the amount of factors of production that are employed.
C. increasing the production of one good and decreasing the production of another.
Goods are __________ when the income elasticity of demand is less than zero. A. substitutes. B. complements. C. inferior. D. elastic. E. normal.
C. inferior.
When Mik has an absolute advantage in the production of two goods over Tommy, Mik: A. always has a comparative advantage over Tommy in the production of both goods. B. cannot gain from trade with Tommy. C. is more productive in producing both goods than Tommy. D. is less productive than Tommy. E. is better off if he does not engage in specialization and trade with Tommy.
C. is more productive in producing both goods than Tommy.
An inferior good has a ________ elasticity of demand. A. positive income B. positive cross C. negative income D. negative cross E. negative price
C. negative income
In the production possibilities frontier model, an unattainable point lies: A. only on the PPF itself. B. only inside of the PPF. C. only outside the PPF. D. both on and outside the PPF. E. There are no unattainable points in the PPF.
C. only outside the PPF.
"Lower ticket prices would lead to more people attending ballgames." This statement is a: A. statement assessing the social interest versus the private interest. B. normative statement. C. positive statement. D. macroeconomic statement. E. statement that confuses marginal cost and sunk cost.
C. positive statement.
An opportunity cost is: A. the dollar amount that is paid. B. anything the decision maker believes costs to be. C. the benefits of the highest-valued alternatives forgone. D. whatever is paid out and cannot be reduced or reversed. E. another term for all the sunk costs.
C. the benefits of the highest-valued alternatives forgone.
The law of demand refers to how: A. demand changes when people's incomes change. B. demand changes when the prices of substitutes and complements change. C. the quantity demanded changes when the price for the good changes. D. the price of the good changes when people's demand for the good changes. E. the quantity demanded changes when the demand for the good changes.
C. the quantity demanded changes when the price for the good changes.
The law of demand refers to how: A. demand changes when people's income changes. B. demand changes when the prices of substitutes and complements change. C. the quantity demanded changes when the price of the good changes. D. the price of the good changes when people's demand for the good changes. E. the quantity demanded changes when the demand for the good changes.
C. the quantity demanded changes when the price of the good changes.
If the price of a good decreases from $9 to $6 and the quantity supplied decreases from 1,500 to 1,300, at the midpoint between these two prices, the elasticity of supply equals A. 3.20. B. 2.80. C. 0.40. D. 0.36. E. 0.20.
D. 0.36.
Suppose a decrease in demand causes the price to decrease from $4 to $3 and the quantity to decrease from 1,000 to 700. Then, at the midpoint between these two prices, the elasticity of supply equals A. 0.81. B. 0.18. C. 2.83. D. 1.24. E. None of the above answers is correct.
D. 1.24.
In the table above, Jack's opportunity cost for 1 pound of food is ________ and his opportunity cost for 1 pound of clothing is ________. A. 1 pound of clothing; 4 pounds of food. B. 1 pound of food; 1 pound of clothing. C. 2 pounds of clothing; 2 pounds of food. D. 1/2 of a pound of clothing; 2 pounds of food. E. 1/3 of a pound of clothing; 3 pounds of food.
D. 1/2 of a pound of clothing; 2 pounds of food
Which of the following is correct about comparative advantage? A. Some countries will have a comparative advantage in everything. B. Having a comparative advantage without an absolute advantage is impossible. C. A comparative advantage in a good means that the country can produce more of the good than any other country. D. A country has a comparative advantage in the production of a good if it can produce the good at a lower opportunity cost than any other country. E. None of the above answers are correct.
D. A country has a comparative advantage in the production of a good if it can produce the good at a lower opportunity cost than any other country.
The number of logging firms increases. Which of the figures above best illustrates this change? A. Figure A B. Figure B C. Figure C D. Figure D E. Figure A and Figure D
D. Figure D
What typically happens to benefits as the amount of an activity is increased? A. Total benefits remain constant. B. Marginal benefit increases. C. Marginal benefit remains constant. D. Marginal benefit decreases. E. The marginal benefit changes only if the marginal cost changes.
D. Marginal benefit decreases.
Why does a nation experience increasing opportunity cost? A. as the nation moves from a production point within the PPF to one on the PPF, opportunity costs increase. B. as the nation moves from a production point within the PPF to another point also within the PPF, opportunity cost increases. C. When the amount of resources increases, the opportunity cost of all goods and services increases. D. Resources are not equally productive in producing different kinds of goods and services. E. because the nation cannot produce at the unattainable production points that lie beyond the PPF.
D. Resources are not equally productive in producing different kinds of goods and services.
Which of the following is an example of a positive economic statement? A. Voter ID laws should be strictly enforced. B. Illegal immigration is the biggest threat to national security that we face today. C. Medicare recipients should only be allowed to visit a doctor for non-emergency reasons on Mondays, Wednesdays, and Fridays. D. The death penalty is a strong deterrent to violent criminal activity. E. The Affordable Care Act should be repealed.
D. The death penalty is a strong deterrent to violent criminal activity.
Suppose that the equilibrium price and quantity of new houses both increase. Which of the following could be a cause of this change? A. Both the supply and the demand for new houses increased and the supply increased by more than the demand. B. The supply of new houses decreased and the demand for new houses did not change. C. The supply of new houses increased and the demand for new houses did not change. D. The demand for new houses increased and the supply did not change. E. Both the supply and demand for new houses decreased.
D. The demand for new houses increased and the supply did not change.
A decrease in the price of a complement in production leads to A. a decrease in the quantity supplied of the good in question. B. no change in the supply of the good in question. C. an increase in the supply of the good in question. D. a decrease in the supply of the good in question. E. an increase in the supply of the good in question and a decrease in the quantity supplied of the good in question.
D. a decrease in the supply of the good in question.
Which of the following would most likely cause a country's PPF to shift outward at every point along the frontier? A. a decrease in idle capital. B. a decrease in unemployment. C. a technological advance in only one sector of the economy. D. a general technological advance that affects all sectors of the economy. E. none of the above.
D. a general technological advance that affects all sectors of the economy.
Which of the following increases the demand for a good or service? A. a fall in the price of the good or service. B. a smaller number of consumers wanting to buy the good or service. C. a rise in the price of the good or service. D. a rise in the price of a substitute good or service. E. a rise in the price of a compliment.
D. a rise in the price of a substitute good or service.
Which of the following does NOT increase the supply of personal computers, that is, does NOT shift the supply curve of personal computers? A. an advance in the technology used to produce personal computers. B. an increase in the number of firms producing personal computers. C. a fall in the cost of the components used to assemble personal computers. D. a rise in the price of personal computers E. a change in the expected future price of a personal computer.
D. a rise in the price of personal computers
Scarcity forces people to: A. be unwilling to help others. B. cheat and steal. C. live at a low standard of living. D. choose among available alternatives. E. consume as much as they can as quickly as they can.
D. choose among available alternatives.
If the price of corn increases by 20 percent and the quantity supplied of corn increases by 30 percent, then supply is A. inelastic and the elasticity of supply equals 1.5. B. elastic and the elasticity of supply equals 0.66. C. inelastic and the elasticity of supply equals 0.66. D. elastic and the elasticity of supply equals 1.5. E. either elastic or inelastic but more information about the elasticity of demand is needed to determine which.
D. elastic and the elasticity of supply equals 1.5.
The price elasticity of demand for Red Delicious apples, a certain type of apple, is likely A. inelastic. B. perfectly elastic. C. unit elastic. D. elastic. E. perfectly inelastic.
D. elastic.
Suppose that, instead of taking this test, you could either have worked and earned income or parties and had a pleasurable time. Your opportunity cost of taking the test is the: A. forgone work B. forgone party C. forgone working and parting D. forgone working or partying, depending on which was your next best choice E. test because you are taking it
D. forgone working or partying, depending on which was your next best choice
A product's price elasticity of demand is likely to be greater A. if consumers spend a small proportion of income on the product. B. if it only has a few substitutes. C. the less time consumers have to adjust to price changes. D. if the product is a luxury good rather than a necessity. E. Both answers C and D are correct.
D. if the product is a luxury good rather than a necessity.
Mothers Against Drunk Drivers (MADD) campaigned to increase the legal penalties of drunk driving. This successful campaign ________ of drunk driving. A. decreased the marginal benefit B. increased the sunk cost C. increased the marginal benefit D. increased the marginal cost E. decreased the marginal cost
D. increased the marginal cost
Goods are _________ when the income elasticity of demand is positive. A. complements. B. elastic. C. inferior. D. substitutes. E. normal.
D. substitutes.
A demand schedule shows A. the quantities that people plan to buy in all possible circumstances. B. the quantities that people plan to buy at each different income when all other influences on buying plans remain the same. c. the quantities that people would plan to buy if they could afford them at each different price when all other influences on buying plans remain the same. D. the quantities that people plan to buy at each different price when all other influences on buying plans remain the same. E. the quantities that people plan to buy at each different price as long as producers are willing to supply that quantity.
D. the quantities that people plan to buy at each different price when all other influences on buying plans remain the same.
A firm can sell 10 units if the price is $100 and can sell 8 units if the price is $125. At the midpoint between these two prices, what is the price elasticity of demand? A. 1.25 B. 0.50 C. 0.75 D. 0.0 E. 1.00
E. 1.00
The figure shows the production possibility frontier for a country. Suppose the country is producing at point D and increases production of rice to 15 tons. Given this change, what is the opportunity cost per ton of rice? A. 12 tons of rice B. 6 thousand bottles of wine C. 15 thousand bottles of wine D. Nothing, it is a free lunch E. 3 thousand bottles of wine
E. 3 thousand bottles of wine
Which economic question depends on the incomes that people earn and the prices they pay for goods and services? A. How? B. Why? C. What? D. Where? E. For whom?
E. For whom?
Patrick lives near two gas stations, Exxon and Shell. If Exxon decreases the price of gas, we predict that the quantity of gasoline demanded at Shell will A. increase because Exxon and Shell gas are complements. B. decrease because Exxon and Shell gas are complements. C. increase because Exxon and Shell gas are substitutes D. not change Exxon and Shell are different brands of gasoline. E. decrease because Exxon and Shell gas are substitutes.
E. decrease because Exxon and Shell gas are substitutes.
A production possibilities frontier shows A. how money can be allocated among two kinds of goods. B. the limits to future growth of a nation. C. that if price of one good decreases, the price of the other has to increase. D. that it is impossible to produce inefficiently. E. the various combinations of output a nation can produce a certain time, given its available resources and technology.
E. the various combinations of output a nation can produce a certain time, given its available resources and technology.
If the price of iPads decreases A. there will be a rightward shift in the iPad supply curve. B. there will be a movement up along the supply curve for iPads. C. the supply curve for iPads shifts leftward. D. there has been a decrease in the price of iTunes songs. E. there will be a movement down along the supply curve for iPads.
E. there will be a movement down along the supply curve for iPads.
If consumers buy a large number of plug−in electric cars, the equilibrium price of electricity will ________ and the equilibrium quantity of electricity will ________. A. not change; increase B. rise; increase C. rise; decrease D. fall; increase E. fall; decrease
B. rise; increase
Using the data in the table above, the equilibrium quantity and equilibrium price for a stapler is A. 60,000 and $5. B. 10,000 and $8. C. 70,000 and $6. D. 90,000 and $8. E. 100,000 and $5.
C. 70,000 and $6.
The bowed out (concave) shape of the production possibilities curve implies that as production of one good A. decreases, production of other goods decreases as well. B. increases, society can obtain a free lunch. C. increases, society must forgo increasing amounts of another good. D. increases, society must forgo decreasing amounts of another good. E. increases, production of other goods increases as well.
C. increases, society must forgo increasing amounts of another good.
