ECON 2302 -PRACTICE EXAM 1

results in a movement upward and to the left along a demand curve

A decrease in quantity demanded

supply curve to the right

A improvement in production technology will shift the

supply curve for Ashley's bread will increase

Ashley bakes bread that she sells at the local farmer's market. If she purchases a new convection oven that reduces the costs of baking bread, the

scarcity

Economics deals primarily with the concept of

buyers cannot buy all they want to buy at the price ceiling

If a price ceiling is a binding constraint on a market, then

zero, and the supply curve is vertical

If sellers do not adjust their quantity supplied at all in response to a change in price, the price elasticity of supply is

40 percent decrease in the quantity demanded

If the price elasticity of demand for a good is 4.0, then a 10 percent increase in price results in a

Both a and b are correct

In a market economy, a) households decide which firms to work for and what to buy with their incomes. b)firms decide whom to hire and what to make. c)a central planner makes decisions about production and consumption. d)Both a and b are correct.

conduct laboratory experiments

In conducting their research, economists face an obstacle that not all scientists face; specifically, in economics, it is often difficult and sometimes impossible to

Panel (b)

Refer to the above figure Which of the four panels represents the market for winter coats as we progress from winter to spring?

binding price floor that creates a surplus

Refer to the above figure. A government-imposed price of $12 in this market is an example of a

an expectation by buyers that their incomes will increase in the very near future

Refer to the above figure. Which of the following would cause the demand curve to shift from Demand A to Demand B in the market for golf balls in the United States? A)a decrease in the price of golf balls B)an increase in the price of green fees C)an expectation by buyers that their incomes will increase in the very near future D)a change in consumer tastes away from golf and toward tennis

a change in consumer preferences toward watching movies in movie theaters rather than at home

Refer to the above figure. Which of the following would cause the demand curve to shift from Demand C to Demand A in the market for DVDs? A)an increase in the price of DVDs B)a decrease in the price of DVD players C)a change in consumer preferences toward watching movies in movie theaters rather than at home D)an expectation by buyers that their incomes will increase in the very near future

Panel (c)

Refer to the above figure. Which of the four panels represents the market for cars as a result of the adoption of new technology on assembly lines?

Panel (d)

Refer to the above figure. Which of the four panels represents the market for peanut butter after a major hurricane hits the peanut-growing south?

5 wallets for 3.75 purses

Refer to the above graphs. At which of the following prices would both Hosne and Merve gain from trade with each other? A)5 wallets for 1.25 purses B)5 wallets for 2.5 purses C)5 wallets for 3.75 purses D)Hosne and Merve could not both gain from trade with each other at any price.

purses and Merve has a comparative advantage in the production of wallets

Refer to the above graphs. Hosne has a comparative advantage in the production of

both goods and Merve has an absolute advantage in the production of neither good

Refer to the above graphs. Hosne has an absolute advantage in the production of

beef and Zardia should specialize in the production of wheat

Refer to the above table. Andia should specialize in the production of

4 bushels of wheat and 5 pounds of beef

Refer to the above table. Assume that Andia and Zardia each has 60 minutes available. If each person spends all his time producing the good in which he has a comparative advantage, then total production is

12 bushels of wheat for 19 pounds of beef

Refer to the above table. At which of the following prices would both Andia and Zardia gain from trade with each other? A)6 bushels of wheat for 10.5 pounds of beef B)12 bushels of wheat for 19 pounds of beef C)24 bushels of wheat for 34 pounds of beef D)Andia and Zardia could not both gain from trade with each other at any price.

5/3 pounds of beef

Refer to the above table. What is Andia's opportunity cost of producing one bushel of wheat?

$980

Refer to the above. The amount of the tax revenue raised is

$10

Refer to the above. The effective price that sellers receive after the tax is imposed is

$8

Refer to the above. The per-unit burden of the tax on buyers is

binding price ceiling that creates a shortage

Refer to the figure on the previous page. A government-imposed price of $6 in this market is an example of a

70 notepads and 0 lamps.

Refer to the previous graph. If this economy devotes all of its resources to the production of notepads, then it will produce

None of the above; the economy cannot move from point W to point V

Refer to the previous graph. The opportunity cost of obtaining 20 additional lamps by moving from point W to point V is a)0 notepads. b)10 notepads. c)50 notepads. d)None of the above; the economy cannot move from point W to point V.

decrease in the demand for printers and a decrease in the quantity supplied of printers

Suppose buyers of computers and printers regard the two goods as complements. Then an increase in the price of computers will cause a(n)

-1.0, and X and Y are complements

Suppose that when the price of good X falls from $10 to $8, the quantity demanded of good Y rises from 20 units to 25 units. Using the midpoint method, the cross-price elasticity of demand is

quantity demanded of toothpaste decreases, and the quantity of toothpaste that firms want to supply increases

Suppose the equilibrium price of a tube of toothpaste is $2, and the government imposes a price floor of $3 per tube. As a result of the price floor, the

Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous

Suppose the number of buyers in a market increases and a technological advancement occurs also. What would we expect to happen in the market?

elastic because there are many close substitutes for Hubba Bubba

The demand for Hubba Bubba bubble gum is likely

buyers' responsiveness to a change in the price of a good

The price elasticity of demand measures

longer the time period being considered

The supply of a good will be more elastic, the

-2.33, and hot dogs are an inferior good

Tyler purchases 5 pounds of hot dogs per month when his monthly income is $2,000 and 4 pounds of hot dogs per month when his monthly income is $2,200. Tyler's income elasticity of demand for hot dogs is

with shortages and waiting lists, they have no incentive to maintain and improve their property

Under rent control, landlords cease to be responsive to tenants' concerns about the quality of the housing because

price no longer serves as a rationing device

When a binding price ceiling is imposed on a market

an increase in total revenue

When demand is inelastic, an increase in price will cause

1.06

When the price of a bracelet was $25 each, the jewelry shop sold 20 per month. When it raised the price to $35 each, it sold 14 per month. Using the midpoint method, the price elasticity of demand for bracelets is about

once an economy has reached the efficient points on its production possibilities frontier, the only way of getting more of one good is to get less of the other

Which of the following trade-offs does the production possibilities frontier illustrate? A)if an economy wants to increase efficiency in production, then it must sacrifice equality in consumption B)once an economy has reached the efficient points on its production possibilities frontier, the only way of getting more of one good is to get less of the other C)for an economy to consume more of one good, it must stop consuming the other good entirely D)for an economy to produce and consume goods, it must sacrifice environmental quality

a shortage of the good

Which of the following would cause price to increase?