ECON&202 Macro First Exam Dean

(Table) The table shows coffee and tea units produced for the United States and Japan. The opportunity costs are:

constant for the United States and increasing for Japan.

A production possibilities frontier that is a straight line is the result of:

constant opportunity costs.

Deadweight loss reduces:

consumer surplus and producer surplus.

An economy exhibits production efficiency if:

it produces goods at the lowest possible cost.

(Figure: Determining Surplus 2) In the graph, consumer surplus is equal to ________.

$15

Suppose that a customer's willingness to pay for a product is $5, and the seller's willingness to sell is $4. If the negotiated price is $3, how much is consumer surplus?

$2

Suppose that a customer's willingness to pay for a product is $1,480, and the seller's willingness to sell is $1,210. If the negotiated price is $1,479, how much is producer surplus?

$269

Company DEF produces gizmos. One particular batch cost $50,000 to produce. Because market conditions were bad at the time of sale, they were sold at a loss for $40,000. The value of the gizmos included in the GDP is:

$40,000.

(Table) If the numbers in the table were placed on a graph, with hot chocolate sales on the vertical axis and temperature on the horizontal axis, the slope would be:

-2.

The economy is least likely to be heading into a recession when the National Activity Index equals:

0.81.

Figure: Understanding Surplus and Efficiency) In the graph, what is the efficient level of output?

10

(Figure: Pork and Corn PPF 2) The opportunity cost of producing a unit of pork is _____ unit(s) of corn.

5

What is the difference between a change in quantity supplied and a change in supply?

A change in the market price affects the quantity supplied, but not the supply.

Which situation involves an external cost?

Alma lives next to a freeway and the noise wakes her up every morning, against her wishes, at six o'clock.

The country of Economia has a higher productivity rate than Productstan. Which statement is therefore correct?

Economia has a higher standard of living for its citizens than Productstan.

Laissez-faire is a _____ term that means _____.

French; "let it be"

The event that stimulated the U.S. government's commitment to tracking the economy's health through a national income accounting system was the:

Great Depression.

Which is NOT considered a basic economic question?

How will the system accommodate change?

Which situation(s) may require government intervention?I. A local business has made a profit in each of the last ten years.II. Students are having difficulty deciding whether to go the beach or to go hiking for their class trip.III. A manufacturing firm on a river is dumping production run off into the water.

III only

If the supply curve shifts leftward, the:

price in the market will increase.

The study of macroeconomics as a specific discipline can be attributed to:

John Maynard Keynes.

Which statement is TRUE?

Low productivity and low pay go together

Figure: Mileage and Speed by Car Weight) Which statement about the graph is CORRECT?

Mileage is related to both speed and car weight.

Which of the following statements is true about the National Activity Index?

Negative values mean the economy is growing more slowly than its long-term trend.

Which of the following statements does NOT describe an adjustment to national income to obtain GDP?

Net exports are added to national income.

Suppose an economist discovers that the relationship between grades and hours of tutoring is Grade = 60 + 5(Hours). Based on the equation, which statement is true?

The expected grade with 5 hours of tutoring is 85.

(Table) Looking at the data for Tom and Joe, what specialization pattern will exist if trade is based on comparative advantage?

Tom will specialize in cakes and Joe will specialize in shirts.

If a producer does NOT face increasing opportunity cost, then the production possibilities frontier is:

a straight downward-sloping curve.

The Scandinavian countries of Europe:

allow a large role for government services.

Minimum wage laws:

create a price floor below which workers cannot be legally paid.

Alfred Marshall is primarily responsible for:

developing the law of supply and demand.

The way an economy allocates output to consumers is called:

distribution.

A decrease in the quantity supplied of iPads is caused by a(n):

drop in the price of iPads.

The three types of consumption are:

durables, nondurables, and services.

Which topic is MOST likely to be studied in a microeconomics course?

energy policy

If both the supply and the demand curves shift to the right:

equilibrium quantity increases and the effect on equilibrium price is indeterminate

In the formula for GDP (GDP = C + I + G + (X - M)), what does X represent?

exports

When a good has an external cost, the market is said to:

fail because it over-produces the good.

Willingness to pay is the:

highest value that a consumer believes a good or service is worth.

(Figure: Demand for Shoes) A shift to the right of the demand curve could be caused by a(n):

increase in income if the good is a normal good.

If two variables are positively related, then, as one variable:

increases the other variable increases, and as one variable decreases the other variable decreases.

GDP includes output produced _____ but it does not include output produced _____.

inside the United States by foreign citizens; outside the United States by U.S. citizens

A recent decision regarding the Federal Reserve's impending interest rate increase is an example of a _____ topic. On the other hand, a debate on the impact of the arrival of Uber on local taxi businesses is an example of a _____ topic.

macroeconomic; microeconomic

When quantity demanded in a market equals quantity supplied, then the:

market is in equilibrium.

In the market for cable television, fewer people are subscribing to cable while the cost of providing cable television has increased. As a result, since the impact on the market is the same for both events, we can expect:

no change in the equilibrium price but a decrease in the equilibrium quantity of cable television.

If television sellers expect the prices of televisions to fall in the future, we are likely to see the price:

of televisions fall and quantity of televisions rise.

Increased illegal immigration into the United States would best be represented with a production possibilities frontier (PPF) as a:

outward shift of the PPF.

Which phase of the business cycle occurs immediately before a trough?

recession

(Figure: Determining Surplus) In the graph, which shape represents consumer surplus?

the triangle hik

A point to the right of the production possibilities frontier is:

unattainable.