EC 201 - Exam 1 Problem Set 1

If the price of gasoline increases significantly, then we'd expect the demand curve for large trucks and SUVs to A) shift to the left. B) shift to the right. C) become upward-sloping. D) not shift, but there will be a movement along that demand curve

A

In deciding whether to study for an economics quiz or go to a movie, one is confronted by the idea(s) of A) scarcity and opportunity costs. B) complementary economic goals. C) money and real capital. D) full production.

A

An increase in demand for oil along with a simultaneous increase in supply of oil will A) increase quantity, but whether it increases price depends on how much each curve shifts. B) decrease price and increase quantity. C) increase price and decrease quantity. D) increase price, but whether it increases quantity depends on how much each curve shifts

A

Answer the question based on the following supply and demand schedules in units per week for a product. Price QD QS $ 60 100 400 50 140 340 40 180 280 30 220 220 20 260 160 10 300 100 The government's introduction of a guaranteed price floor of $10 will result in A) no shortage or surplus. B) a surplus of 200 units. C) an unstable market. D) a shortage of 200 units.

A

Assume that the graphs show a competitive market for the product stated in the question. Select the graph from the problem set (#32) that best shows the change in the market for leather coats when leather coats become more fashionable among young consumers. A) graph A B) graph B C) graph C D) graph D

A

If a subsidy is provided for the production of good X, this will shift the: A) supply curve for X to the right. B) demand curve for X to the right. C) supply curve for X to the left. D) demand curve for X to the left

A

If the opportunity cost of producing extra units of one good (expressed in terms of the amount of another good given up) remains constant, then the shape of the production possibilities curve is A) a straight downward-sloping line. B) an upward-sloping line. C) a vertical line. D) a straight horizontal line.

A

Productive efficiency occurs at the point where A) the production technique minimizes cost. B) consumer surplus exceeds producer surplus by the greatest amount. C) the production technique minimizes economic surplus. D) marginal benefit exceeds marginal cost by the greatest amount.

A

Use the diagram in the problem set (#30) to answer the question. If the price in this market is at $4 per bushel, then there will be a A) surplus and the price will tend to fall. B) surplus and the price will tend to rise. C) shortage and the price will tend to fall. D) shortage and the price will tend to rise.

A

Use the figure in the problem set (#15) to answer the following question. Refer to the three demand curves. An "increase in quantity demanded" would be illustrated by a change from A) point 4 to point 1. B) point 2 to point 5. C) point 4 to point 6. D) point 5 to point 1.

A

Use the following graph (#16) of the demand to answer the question below. Refer to the three demand curves for coffee. Which of following would cause a shift in coffee demand from D1 to D2 if coffee is a normal good? A) an increase in consumer incomes B) an increase in the price of coffee C) a decrease in consumer incomes D) a decrease in the price of coffee

A

Use the following to table to answer the question below. QD Price QS 5 $7 9 6 $6 8 7 $5 7 8 $4 6 9 $3 5 10 $2 4 11 $1 3 If demand decreased by 4 units at each price, what would the new equilibrium price and quantity be? A) $3 and 5 units B) $6 and 8 units C) $5 and 7 units D) $4 and 6 units

A

Use the graph in the problem set (#29) to answer the question. In this market, the equilibrium price is ________ and equilibrium quantity is ________ A) $1.50 per gallon; 28 million gallons. B) $1.00 per gallon; 35 million gallons. C) $28 per gallon; 150 million gallons. D) $1.50 per gallon; 30 million gallons

A

Use the graph in the problem set (#40) for a competitive market to answer the question below: A price ceiling of $10 per unit will result in a A)shortage of 200 units. B) surplus of 200 units. C) shortage of 250 units. D) surplus of 250 units.

A

When the marginal benefit of an output exceeds the marginal cost A) production of that output should be increased, in order to maximize economic surplus. B) increasing the production of that output would increase the missing surplus. C) production of that output should be decreased, in order to maximize economic surplus. D) reducing the production of that output would reduce the missing surplus

A

Which of the following is consistent with the law of demand? A) An increase in the price of hamburgers causes buyers to buy fewer hamburgers. B) A decrease in the price of egg rolls causes a decrease in the quantity of egg rolls demanded. C) A decrease in the price of tacos causes sellers to want to sell less. D) An increase in the people's craving for pizza causes buyers to buy more pizza.

A

A headline reads "Lumber Prices Up Sharply." In a competitive market, this situation would lead to a(n) A) increase in the price and quantity of new homes. B) increase in the price of new homes and decrease in quantity. C) decrease in the price and quantity of new homes. D) decrease in the price of new homes and increase in quantit

B

An increase in the demand for corn is more than offset by an increase in its supply. As a result the equilibrium price will A) increase and the equilibrium quantity will decrease. B) decrease and the equilibrium quantity will increase. C) decrease and the equilibrium quantity will decrease. D) increase and the equilibrium quantity will increase

B

Suppose that goods A and B are close substitutes. If the price of good A falls, then we would expect an A) increase in the demand for good A as well as for good B. B) increase in the quantity of A demanded and a decrease in the demand for B. C) increase in the demand for A and an increase in the quantity of B demanded. D) increase in the demand for A and a decrease in the quantity of B demanded

B

The most important purpose of a market is to A) increase the sellers' wealth. B) bring buyers and sellers together so they can trade. C) bring buyers and sellers together so they can argue. D) bring buyers and sellers together so they can barter.

B

The table below shows the weekly demand for hamburger in a market where there are just three buyers. Buyer 1 Buyer 2 Buyer 3 Price Qd Qd Qd $6 7 4 6 $5 9 7 8 $4 15 10 12 $3 21 15 16 Refer to the table. At a price of $6, the weekly market quantity demanded for hamburger is A) 24. B) 17. C) 23. D) 18.

B

Use the figure in the problem set (#43) to answer the following question. The equilibrium point in the market is the point at which the S and D curves intersect. At equilibrium, consumer surplus would be represented by the area A) a + b. B) a. C) b + c. D) a + b + c.

B

Use the following table to answer the question below Jake's Production Possibility Schedule Pounds of Green Beans 0, 10, 20, 30, 40 Pounds of Corn 160, 120, 80, 40, 0 Jane's Production Possibility Schedule Pounds of Green Beans 0, 20, 40, 60, 80 Pounds of Corn 80, 60, 40, 20, 0 Who has the comparative advantage in the production of corn? A) Neither B) Jake C) Both D) Jane

B

Use the following table to answer the question below. Dave's Production Possibility Schedule Pounds of Green Beans 0, 20, 40, 60, 80 Pounds of Corn 160, 120, 80, 40, 0 Dave's opportunity cost of producing 1 pound of green beans is ________ pound(s) of corn. A) 4 B) 2 C) 1 D) 1/2

B

Use the graph in the problem set (#42) for a competitive market for a product where the government has set a price floor of OC to answer the question below. What quantity will the sellers be able to sell after the imposition of the price floor? A) CB B) 0E C) 0F D) 0G

B

Which of the following will cause a decrease in market equilibrium price and an increase in equilibrium quantity? A) A decrease in demand. B) An increase in supply. C) An increase in demand. D) A decrease in supply

B

An improvement in production technology will A) increase equilibrium price. B) shift the demand curve to the left. C) shift the supply curve to the right. D) shift the supply curve to the left.

C

In the diagrams in the problem set (#35), the subscript "1" refers to the initial position of the curve, while the subscript "2" refers to the final position after the curve shifts. Which diagram above illustrates the effect on the natural-gas market, with the widespread use of "fracking" or hydraulic fracturing by gas-drilling companies? A) A B) B C) C D) D

C

Lauren makes $150 a day as a bank clerk. She takes two days off work without pay to fly to another city to attend the concert of her favorite band. The cost of transportation and lodging for the trip is $250. The cost of the concert ticket is $50. The opportunity cost of Lauren's decision to attend the concert is A) $250. B) $300. C) $600. D) $450.

C

The table below shows the weekly supply for hamburger in a market where there are just three sellers. Seller 1 Seller 2 Seller 3 Price Qs 1 Qs 2 Qs 3 $5 8 5 4 4 6 4 3 3 4 3 2 2 2 2 1 Refer to the above table. If the price of hamburger falls from $5 to $4, then the weekly market quantity supplied will A) increase from 9 to 17. B) increase from 13 to 17. C) decrease from 17 to 13. D) decrease from 17 to 9.

C

Use the figure in the problem set (#46) to answer the following question. The equilibrium point in the market is the point at which the S and D curves intersect. At equilibrium, economic surplus is represented by the area A) b. B) b + c. C) a + b. D) c.

C

Use the figure in the problem set (#48) to answer the following question. If a price floor in this market is set at P2, then deadweight loss equals area A) b + d. B) d + h. C) d. D) f

C

Use the figure in the problem set (#49) to answer the following question. What price does the consumer pay after the government imposes the excise tax on the market? A) $11 B) $4 C) $13 D) $9

C

Use the following table to answer the question below. Price per Unit $5, 10, 15, 20, 25, 30 Quantity Demanded per Year 2,000, 1,800, 1,600, 1,400, 1,200, 1,000 Quantity Supplied per Year 0, 300, 600, 900, 1,200, 1,500 At a price of $15 per unit, which of the following would exist? A) A surplus of 1,000 units. B) A shortage of 1,600 units. C) A shortage of 1,000 units. D) A surplus of 600 units.

C

Which of the following exemplifies a microeconomics question? A) Is the aggregate output in the economy greater this year than last year? B) Is the economy experiencing a decline in the rate of inflation? C) Will a new type of electronic reader or tablet increase the number of buyers? D) What is the current national rate of unemployment?

C

Which one of the following would not affect the position of the supply curve for cranberries? A) development of a new pest control for cranberries B) cost of fertilizers for cranberry production C) popularity of cranberry drinks D) the number of sellers in the market

C

Which statement best illustrates the concept of diminishing marginal utility? A) A decrease in the price of hamburgers will cause consumers to buy more hamburgers because they can afford to buy more B) As one consumes more hamburgers per week, one would be willing to pay a higher price for additional hamburgers. C) A typical consumer will receive less satisfaction from consuming the fourth hamburger in a week than from the third hamburger. D) Some consumers will receive less satisfaction from consuming hamburgers than from consuming fried chicken.

C

Which would be a likely cause of an increase in the demand for pizza? A) an increase in the price of pizza B) a decrease in the price of pizza C) a health report showing eating pizza reduces stress D) a reduced desire for take-out and fast-food dining

C

From an economic perspective, when consumers leave a fast-food restaurant because the lines to be served are too long, they have concluded that the A) management is exhibiting irrational behavior by not maximizing profits. B) management is making an assumption that other things are equal. C) marginal cost of waiting is less than the marginal benefit of being served. D) marginal cost of waiting is greater than the marginal benefit of being served.

D

Farmers withholding some of their current corn harvest from the market because they anticipate a higher price of corn in the near future would cause a A)movement up along the current supply curve of corn. B) rightward shift in the current supply of corn. C) movement down along the current supply curve of corn. D) leftward shift in the current supply of corn.

D

Graphically, producer surplus is measured as the area A) under the demand curve and below the actual price. B) under the demand curve and above the actual price. C) above the supply curve and above the actual price. D) above the supply curve and below the actual price

D

If the price of a product decreases, we would expect A) supply to decrease. B) demand to increase. C) quantity supplied to increase. D) quantity supplied to decrease.

D

Refer to the graphs in the problem set (#39) to answer the question below. Select the graph that best shows the changes in demand and supply in the beef market if a new diet fad favoring beef consumption becomes hugely popular, while cattle producers see steeply rising costs of cattle feed. A) graph A B) graph B C) graph C D) graph D

D

Use the figure in the problem set (#23) to answer the following question. A decrease in supply is depicted by a A) shift from S1 to S2. B) move from point x to point y. C) move from point y to point x. D) shift from S2to S1.

D

Use the figure in the problem set (#25) to answer the following question. The diagram shows three supply curves for corn. Which of the following would cause the supply of corn to shift from S1 to S3? A) an increase in the number of acres of farmland allocated to corn B) a decrease in the cost of equipment used in corn farming C) a decrease in the price of corn D) an increase in the cost of equipment used in corn farming

D

Use the figure in the problem set (#50) to answer the following question. What is the amount of government revenue after the government imposes the excise tax on the market? A) $540 B) $162 C) $486 D) $144

D

Use the figure in the problem set (#9) to answer the question below. Point A in the figure above is A) local. B) not attainable. C) efficient. D) inefficient.

D

What does "there is no such thing as a free lunch" mean in economics? A) Products only have value because people are willing to pay for them. B) Sometimes people may take friends out to lunch and pay for them. C) All items in the lunch menu have specific prices. D) Scarce resources are used up to provide "freebies" and giveaways.

D

Which of the following do economists consider to be capital? A) a savings account B) a pair of stockings C) a share of IBM stock D) a construction crane

D

Which of the following would most likely increase the demand for gasoline? A) an increase in the price of gasoline B) a decrease in the price of gasoline C) the expectation by consumers that gasoline prices will be lower in the future D) the expectation by consumers that gasoline prices will be higher in the future

D