EC 2123 Exam 1

Netflix canceled its original series, Ozark, after season 4, indicating that Netflix determined producing season: a. 5 was not worth the marginal cost b. 2 was not worth the marginal cost c. 6 was a sunk cost d. 5 was a sunk cost

a. 5 was not worth the marginal cost

You just got a big raise in pay. On your next trip to the store, you walk right past the canned tuna and go to the seafood section. Which statement is probably TRUE? a. For you, canned tuna is an inferior good, and fresh seafood is a normal good b. The fresh seafood must have been on sale c. Your preferences for canned tuna and fresh seafood have changed d. For you, fresh seafood is an inferior good, and canned tuna is a normal good

a. For you, canned tuna is an inferior good, and fresh seafood is a normal good

The cost-benefit principle states that a decision should be pursued only if the: a. benefits are greater than the costs. b. benefits are positive. c. costs are negative. d. costs are greater than the benefits.

a. benefits are greater than the costs.

If a good is a necessity with few substitutes, demand will tend to be: a. inelastic b. the same as that of an inferior good c. perfectly inelastic d. elastic

a. inelastic

12. If demand is _____, a higher price yields _____ total revenue. a. inelastic; higher b. elastic; no change in c. elastic; higher d. inelastic; lower

a. inelastic; higher

In Douglas County, Washington, apple production is limited by the number of acres available for agricultural production. Which economic concept does this statement BEST represent? a. scarcity b. opportunity cost c. marginal analysis d. equilibrium

a. scarcity

Your $10 donation to a charity provides one blanket to an unhoused person. Given that you followed the Rational Rule for Consumers in the transaction, you can conclude that your willingness to pay for this type of generosity is at least: a. $8 b. $1 c. $10 d. $5

c. $10

If you live in a _____ economy, you would expect prices to move _____, whereas if you live in a _____ economy, that is not likely. a. planned; toward equilibrium; market b. planned; only along the market supply curve, barter c. market; toward equilibrium; planned d. planned; only along the market demand curve, market

c. market; toward equilibrium; planned

The price of microchips used to produce iPads rises. As a result, the equilibrium price of iPads _____, and the equilibrium quantity _____. a. falls; increases b. falls; decreases c. rises; decreases d) rises; increases

c. rises; decreases

The state of Texas recently saw a gasoline price increase of 5%, which brought about a fall in the quantity of gasoline purchased of 1%. The price elasticity of demand is equal to _____, and demand is described as _____. a. 5; elastic b. 0.2; elastic c. 5; inelastic d. 0.2; inelastic

d. 0.2; inelastic

Jonathan's income falls by 15%. He decides to cut down his purchases of high-end restaurant meals by 20%. His income elasticity of demand for high-end restaurant meals is: a. -1.33 b. 0.75 c. -0.75 d. 1.33

d. 1.33

You are an economist for the state public education system and are forecasting how much a future tuition increase would impact university enrollment. The proposed tuition increase is 5%. The price elasticity of demand for college education is —0.45. Use the formula for price elasticity of demand to calculate how the price increase for tuition would change the quantity of students enrolled. The tuition increase would _____ overall enrollment by _____ %. a. decrease; 11.11 b. increase; 5.45 c. increase; 4.55 d. decrease; 2.25

d. decrease; 2.25

If the price in the market is such that the quantity supplied exceeds the quantity demanded, then the: a. market is in equilibrium b. market will not adjust to equilibrium c. price is below the equilibrium price d. price is above the equilibrium price

d. price is above the equilibrium price

You're a seller of lawn mowers. When the price of lawn mowers increases, the: a. supply of lawn mowers increases. b. supply of lawn mowers decreases. c. quantity of lawn mowers supplied decreases. d. quantity of lawn mowers supplied increases.

d. quantity of lawn mowers supplied increases.