Econ 201 Exam 2
The phrase ceteris paribus means
"All else equal"
Maria has to choose between driving and taking a train to destination A. Traveling by train cost her $400 and will take 4 hours. Driving to destination A takes 6 hours, and the required amount of gasoline costs $250. Her opportunity cost of time is $15 per hour.
$120 greater than
Jasmine could go to school for a year and train to be an engineer at a cost of $20,000 for her tuition and books. After the year, she can get a job earning $90,000 per year. She is currently earning $50,000 per year. She can keep this job if she doesn't go to school. but it will have to quit if she does go to school. Her room and board is $15,000 per year, and she would incur this expense whether or not she attends college. In terms of dollars, the opportunity cost of going to school for a year is
$70,000
Which of the following factors will NOT cause a shift in the demand for a good?
A change in the market price of the good
Which of the following is likely to cause the supply curve for steel window frames to shift to the right?
A decrease in the cost of production of steel
If the demand and supply curves for a good shift to the right by the same amount, then in comparison to the initial equilibrium, the new equilibrium will be characterized by:
A higher quantity and the same price
Z is a normal good. The equilibrium price and quantity of Z in the year 2011 was $25 and 60 units, respectively. In 2014, the equilibrium price of Z had increased to $35 and the equilibrium quantity had increased to 70 units. Other things remaining the same, which of the following could explain this change?
An increase in consumer income
A recent study found that people that exercise more often have greater levels of happiness. Which is the following is a correct interpretation?
Any of the above may be true- we can't know more without more information
For this question, consider the "planet money podcast: making christmas more joyful, and more efficient." How is efficiency improved in this story?
By allowing trades to occur
Economics is best defined as the study of
Choices made by people faced with scarcity
Bananas and apples are (consumption) substitutions. When the price of bananas falls, the equilibrium quantity of apples will (blank) and the equilibrium price of apples will (blank).
Fall;fall
Which of the following statements is TRUE?
Firms are buyers in the "factors of production market"
A mixed economic system is best described an economy with a mix of
Free markets and government control
A good theory is one that
Has assumptions that mirror reality
Which of the following is an example of a positive economic statement?
Higher interest rates will encourage more savings
Which of the following statements is true?
It's usually the case that actions which increase equity cause increases in efficiency
The lowest price that a seller is willing to accept is the same as her
Marginal cost of production
When goods and services are produced at the lowest possible cost, (blank) occurs.
Productive Efficiency
Suppose that ramen noodles are an inferior good. When income decreases the equilibrium quantity of ramen noodles will (blank) and the equilibrium price of ramen noodles will (blank)
Rise; Rise
Which of the following is NOT a topic of videos that we watched in class?
The effects of trade on the Chinese economy
Suppose that in October the price of a cup of cafe latte was $1.50 and 400 lattes were consumed. In November the price of a latte was $2.00 and 800 lattes were consumed. What might have caused the change?
The price of tea (a consumption substitutes for a cafe lattes) rose
From the consumer's perspective, the marginal cost of a good is measured by (blank). From society's perspective, the marginal benefit of a good is measured by (blank).
The price of the good; the demand curve
Which of the following statements is true?
The study of the unemployment rate is covered under macroeconomics
Suppose that the market for ramen noodles (an inferior good) is initially in equilibrium. If the incomes of potential buyers rises, but the price of ramen noodles stays at the initial equilibrium price, then
There will be a surplus of ramen noodles
Which of the following is a necessary condition for two people to achieve gains from the trade?
They specialize according to their comparative advantages
Which of the following examples best describes the Law of Demand?
When the price of bread doubles, John's consumption of bread falls by 50%.
The cost of raising beef cattle has risen at the same time as consumer preference for beef has risen (i.e increase in beef demand). In the market, these events result in the equilibrium price (blank) and the equilibrium quality (blank).
increasing; increasing, decreasing, or not changing
