ECON Final Exam

B

1 out of 1 points If X is an inferior good, a decrease in income will: A. increase S, decrease P, and increase Q. B. increase D, increase P, and increase Q. C. decrease D, decrease P, and increase Q. D.decrease D, decrease P ,and decrease Q.

D

A minimum wage that is set below a market's equilibrium wage will result in a. an excess demand for labor, that is, unemployment. b. an excess demand for labor, that is, a shortage of workers. c. an excess supply of labor, that is, unemployment. d. None of the above is correct.

A

A recent study found that an increase in the Federal tax on beer (and thus an increase in the price of beer) would reduce the demand for marijuana. We can conclude that: A. beer and marijuana are complementary goods. B. marijuana is an inferior good. C. beer and marijuana are substitute goods. D. beer is an inferior good.

B

Refer to Figure 6-2. As price falls from PA to PB, which demand curve is most elastic? A.All of these are equally elastic. B.D1 C.D2 D.D3

C

Suppose the government imposes a price ceiling of $5 on this market. What will be the size of the shortage in this market? a. 2 units b. 8 units c. 0 units d. 10 units

B

Suppose the supply of bicycles is price elastic. This means that suppliers A. will produce roughly the same amount regardless of price. B. respond significantly to changes in the price of bicycles. C. face many substitutes for bicycles. D. will not increase quantity supplied if the price of bicycles increases.

D

The supply curve shows the relationship between: A. production costs and the amount demanded. B. physical inputs of resources and the resulting units of output. C. business revenues and quantity supplied. D. price and quantity supplied.

C

What is a normal good? A. undefined B. A good that does serve more than one purpose. C. A good for which demand increases as income rises. D. A good for which demand decreases as income rises.

C

What is an inferior good? A. A good that cannot be used together with another good. B. A good for which demand increases as income rises. C. A good for which demand decreases as income rises. D. A good that does not serve any real purpose.

B

What is the impact of a cut in price when demand is inelastic? A. No effect on total revenue. B. A decrease in total revenue. C. An increase in total revenue. D. A change in total revenue by an amount equal to the cut in price.

B

A shift to the right in the demand curve for product A can be most reasonably explained by saying that: A. consumer incomes have declined and they now want to buy less of A at each possible price. B. consumer preferences have changed in favor of A so that they now want to buy more at each possible price. C. the price of A has increased and, as a result, consumers want to purchase less of it. D. the price of A has declined and, as a result, consumers want to purchase more of it.

C

Which good has the least elastic demand? A.Shell gasoline in the long run. B.Gasoline in the long run. C.Gasoline in the short run. D.Shell gasoline in the short run.

D

A binding price floor is shown in a. neither panel (a) nor panel (b). b. panel (a) but not panel (b). c. both panel (a) and panel (b). d. panel (b) but not panel (a).

A

A decrease in quantity demanded (as distinct from a decrease in demand) is depicted by a: A. move from point y to point x. B. move from point x to point y. C. shift from D2 to D1. D. shift from D1 to D2.

C

A price elasticity of demand equals to zero indicates that the demand curve for the product is A.a line, not a curve B.downward sloping C.vertical. D.horizontal.

C

According to the lecture, agricultural price supports are sometimes combined with: A.increases in exports as the good now sells for more B.restrictions on the amount of the good that people in the home country can purchase C.import restrictions, to prevent other countries from bringing the good into the home country D.export restrictions, to prevent the country's farmers from shipping the product overseas

B

An example of a price floor is a. rent control. b. the minimum wage. c. the regulation of gasoline prices in the U.S. in the 1970s. d. any restriction on price that leads to a shortage.

A

An increase in demand accompanied by an increase in supply will increase the equilibrium quantity but the effect on equilibrium price will be indeterminate. A. True B.False

B

An increase in quantity supplied (as distinct from an increase in supply) is depicted by a: A. Shift from S1 to S2 B. Move from point y to point x C. shift from S2 to S1. D. move from point x to point y.

C

An increase in the price of a product will reduce the amount of it purchased because: A. higher price means that real incomes have risen. B. supply curves are upsloping. C. consumers will substitute other products for the one whose price has risen. D. consumers substitute relatively high priced for relatively low priced products.

A

An unusually large crop of coffee beans might: . A. increase the supply of coffee. B. increase the price of coffee. C. decrease the quantity of coffee consumed. D. increase the price of tea.

D

Assume in a competitive market that there is not enough of a good available for everyone who wishes to purchase it. We can predict that price will: A. stay the same B. you can't predict what will happen C. decrease D. increase

C

Compared to equilibrium, how many units will be produced and sold in this market under a price floor of $5? a. 2 units less than equilibrium b. more units than in equilibrium c. 4 units less than equilibrium d. the same number of units as in equilibrium

D.

How do economists avoid confusion over units in the computation of elasticity? A. By using index numbers rather than whole numbers. B. By using aggregate values rather than single values. C. By using the same number as the value of the slope of the curve. CorrectD. By using percentage changes rather than simple differences.

B

How is the responsiveness of the quantity demanded to a change in price measured? A. By multiplying the percentage change in the product's price by the percentage change in the quantity demanded of a product. B. By dividing the percentage change in the quantity demanded of a product by the percentage change in the product's price. C. By multiplying the percentage change in the quantity demanded of a product by the percentage change in the product's price. D. By dividing the percentage change in the product's price by the percentage change in the quantity demanded of a product.

D

If a price floor is not binding, then a. there will be a surplus in the market. b. there will be a shortage in the market. c. the market will be less efficient than it would be without the price floor. d. there will be no effect on the market price or quantity sold.

C

If a supply curve is highly elastic, then a small increase in price generates ____________________: A. a proportional increase in quantity supplied. B. a proportionally smaller increase in quantity supplied. C. a proportionally larger increase in quantity supplied. D. a decrease in quantity supplied.

B

If the government removes a binding price ceiling from a market, then the price paid by buyers will a. decrease and the quantity sold in the market will increase. b. increase and the quantity sold in the market will increase. c. decrease and the quantity sold in the market will decrease. d. increase and the quantity sold in the market will decrease.

B

If the market price is $2.50, what is Kendra's total expenditure on ice-cream cones? A.$9.00 B.$7.50 C.$2.50 D.$2.25

A

In a competitive market, every consumer willing to pay the market price can buy a product, and every producer willing to sell the product at that price can sell it. A. true B.False

C

In panel (b), there will be a. a shortage of wheat. b. lines of people waiting to buy wheat. c. a surplus of wheat. d. equilibrium in the market.

A

In the apartment market, what happens when: The building codes for apartments are strengthened, adding to building costs. A. Supply shifts left, P rises and Q falls B. Demand shifts right, P rises and Q rises C. Supply shifts right, P falls and Q rises D. Demand shifts left, P falls and Q falls

A

In the apple market, what happens when: A huge infestation of worms occurs in apple orchards nationwide. A. Supply shifts left, P rises and Q falls B. Supply shifts right, P falls and Q rises C. Demand shifts left, P falls and Q falls D. Demand shifts right, P rises and Q rises

A

In the beef market, what happens when: The government places a large tax on beef producers. A. Supply shifts left, P rises and Q falls B. Demand shifts right, P rises and Q rises C. Demand shifts left, P falls and Q falls D. Supply shifts right, P falls and Q rises

A

In the computer market, what happens when: Software developers create new improved gaming software. A.Demand shifts right, P rises and Q rises B. Demand shifts left, P falls and Q falls C. Supply shifts left, P rises and Q falls D. Supply shifts right, P falls and Q rises

C

In the computer market, what happens when: Technological improvements lower the cost of producing computers. A. Demand shifts right, P rises and Q rises B. Demand shifts left, P falls and Q falls C. Supply shifts right, P falls and Q rises D. Supply shifts left, P rises and Q falls

A

In the ethanol market, what happens when: Ethanol fuel becomes more popular. A. Demand shifts right, P rises and Q rises B. Supply shifts right, P falls and Q rises C. Demand shifts left, P falls and Q falls D. Supply shifts left, P rises and Q falls

A

In the housing market, rent control causes a. quantity supplied to fall and quantity demanded to rise. b. quantity supplied and quantity demanded to rise. c. quantity supplied to rise and quantity demanded to fall. d. quantity supplied and quantity demanded to fall

B

In the lecture video, which good did I say had demand that was almost perfectly inelastic? A.The demand facing a seller of luxury goods. B.The demand for birth attendants, such as obstetricians or midwives. C.The demand for gasoline in the short run. D.The demand for economics classes among business majors.

D

In the music CD market, what happens when: A. Supply shifts left, P rises and Q falls B. Demand shifts right, P rises and Q rises C. Supply shifts right, P falls and Q rises D.Demand shifts left, P falls and Q falls

A

In the music CD market, what happens when: CD stores close down because they are losing money. A. Supply shifts left, P rises and Q falls B. Demand shifts left, P falls and Q rises C. Demand shifts right, P rises and Q rises D. Supply shifts right, P falls and Q rises

C

In the newspaper market, what happens when: The number of newspaper buyers falls as more people get their news from the internet. A. Supply shifts left, P rises and Q falls B. Demand shifts right, P rises and Q rises C.Demand shifts left, P falls and Q falls D. Supply shifts right, P falls and Q rises

C

In the newspaper market, what happens when: The price of paper increases. A. Supply shifts right, P falls and Q rises B. Demand shifts right, P rises and Q rises C. Supply shifts left, P rises and Q falls D. Demand shifts left, P falls and Q falls

C

In the used car maket, what happens when: (used cars are an inferior good) Income rises as the result of an economic expansion. A. Supply shifts left, P rises and Q falls B. Demand shifts right, P rises and Q rises C.Demand shifts left, P falls and Q falls D. Supply shifts right, P falls and Q rises

D

In the used car market, what happens when: (used cars are an inferior good) Used cars increase in quality. A. Supply shifts right, P falls and Q rises B. Demand shifts left, P falls and Q falls C. Supply shifts left, P rises and Q falls D.Demand shifts right, P rises and Q rises

A

In the video lecture, I said that elasticity can be thought of as which of the following? A. a ratio B. a rubber band C. a balloon D. a derivative

A

Jerrell's demand for pizza is price elastic. This means that Jerrell A.responds significantly to changes in the price of pizza. B.buys roughly the same amount regardless of price. C.prefers hamburger to pizza D.will not buy any pizza if its price increases.

B

One can say with certainty that equilibrium quantity will increase when: A. supply and demand both decrease B. supply and demand both increase C. supply increases and demand decreases D. supply decreases and demand increases.

B

One economist has argued that rent control is "the best way to destroy a city, other than bombing." Why would an economist say this? a. He fears that rent controls will cause a construction boom, which will make the city crowded and more polluted. b. He fears that rent control will eliminate the incentive to maintain buildings, leading to a deterioration of the city. c. He fears that low rents will cause low-income people to move into the city, reducing the quality of life for other people. d. He fears that rent control will benefit landlords at the expense of tenants, increasing inequality in the city.

A

Refer to Figure 6-3. The graph shows the market for Mallika's beaded purses. Following a decrease in the price of beads, Mallika was able to lower her price to $16 and increase her quantity sold to 200. Using the midpoint formula, calculate the price elasticity of demand for Mallika's beaded purses in absolute value. A.2.43 B.0.41 C.0.04 D.25

A

Refer to Figure 6-4 Between points a and b on the demand curve, demand is A.unit elastic. B.elastic. C.perfectly inelastic. D.perfectly elastic

C

Refer to Table 4-1. According to the lecture, what is one consequence of a minimum wage of $8? A.here is an increase in job benefits (like paid vacation) given to workers. B.There is equilibrium. C.There is increased time spent in job search. D.There is an increase in job training workers receive.

A

Refer to the diagram below. If this is a competitive market, price and quantity will move toward: A. $40 and 150 respectively. B. $60 and 200 respectively. C. $60 and 100 respectively. D. $20 and 150 respectively.

C

Refer to the figure below. In which case do we expect a smaller increase in the quantity of spaces supplied in response to a given increase in demand? A. There is insufficient information to answer the question. B. The increase would be the same in either graph. C. In the graph on the left side. D. In the graph on the right side.

A

Refer to the figure below. In which of the graphs does a price decrease lead to an increase in total revenue? A. In the graph on the right. B. In the graph on the left. C. In both graphs. D. In neither graph.

C

Refer to the graph below. After a price of $3.50 is imposed by government in this market, what meaning do we give to area B + C? A. Additional consumer surplus to existing consumers in the market. B. A surplus of wheat. C.Adeadweight loss. D.Producer surplus transferred to consumers.

B

Refer to the graph below. What happens to quantity demanded in this graph? A. It increases as the price increases. B. It increases as the price decreases. C. It may increase or decrease as the price increases. D. It is not related to price.

D

Refer to the graph below. What is the impact of higher population and income growth on equilibrium in this graph? A. A lower equilibrium price and lower equilibrium quantity. B. A lower equilibrium price and higher equilibrium quantity. C. A higher equilibrium price and lower equilibrium quantity. D. A higher equilibrium price and higher equilibrium quantity.

B

Refer to the graphs below. Each graph refers to the supply for printers. Which of the graphs best describes the impact of an increase in productivity? A. The graph of the left. B. The graph on the right. C. Neither graph. D. Both graphs.

B

Refer to the graphs below. Each graph refers to the supply for printers. Which of the graphs best describes the impact of an increase in the number of firms in the market? A. The graph on the left. B. The graph on the right. C. Both graphs. D. Neither graph

C

Refer to the table below. If demand is represented by column (2) and supply is represented by column (5), equilibrium price and quantity will be A. $9 and 50 units. B. $10 and 60 units. C.$8 and 60 units. D. $7 and 50 units.

C

Sellers whose costs are greater than the equilibrium price are represented by segment a. AC. b. BC. c. CH. d. CK.

C

Suppose that in a free market, 15,000 patients receive a kidney transplant. Although the organ is donated to the patients, the price of a transplant is still a hefty $250,000 to cover hospital and doctors' fees. And advocate of medical care reform argues that the government should put a maximum price of $80,000 on kidney transplants to make the surgery more affordable. Suppose patients will die without a kidney transplant. What is likely to happen if a ceiling of $80,000 is imposed, ceteris paribus? Compared to the free market outcome with no government intervention. A.More doctors will be willing to perform the surgery. B.More kidneys will now be donated. C.More patients will now die from kidney problems. D.The price ceiling benefits all patients in need of the surgery.

C

Suppose that when the price per case of Bullmoose beer rises from $14 to $16, the quantity demanded falls from 300 to 200 cases per week. Using the midpoint formula, calculate the price elasticity of demand (in absolute value) over this range? A.2 B.0.33 C.3 B.0.032

B

Suppose that when the price per case of Bullmoose beer rises from $14 to $16, the quantity demanded falls from 300 to 200 cases per week. What will happen to Bullmoose Brewery's total revenue in response to this price increase? A.increase B.decrease C.insufficient information to answer question D.no change

C

Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price floor of $250 per physical. As a result of the price floor, a. the demand curve for physicals shifts to the left. b. the supply curve for physicals shifts to the right. c. the quantity demanded of physicals decreases and the quantity supplied of physicals increases. d. the number of physicals performed stays the same, but the price changes

B

Table 6-1. Suppose the government imposes a price ceiling of $1 on this market. What will be the size of the shortage in this market? a. 10 units b. 8 units c. 0 units d. 2 units

A

Table 6-1. Which of the following price floors would be binding in this market? a. $4 b. $1 c. $2 d. $3

D

Table 6-2 Which of the following statements is correct? a. A price ceiling set at $20 will be binding and will result in a surplus of 250 units. b. A price floor set at $20 will not be binding. c. A price floor set at $20 will be binding and will result in a surplus of 100 units. d. A price floor set at $20 will be binding and will result in a surplus of 250 units.

A

The imposition of a binding price ceiling on a market causes quantity demanded to be a. greater than quantity supplied. b. equal to quantity supplied. c. less than quantity supplied. d. Both (a) and (b) are possible.

C

The minimum wage of $7.50 results in how much unemployment? A.40,000 people B.10,000 people C. 20,000 people D.none

A

The price elasticity for a particular brand of raisin bran is, in absolute value: A. Larger than the elasticity for all breakfast cereals together. B. The same as the elasticity for all breakfast cereals. C. Smaller than the elasticity for all breakfast cereals together.

A

The town of Bloomfield is well known for its basketball team. The price of basketball games tickets is determined by market forces. Table 6-2 below shows the demand and supply schedules for basketball games tickets. Use Table 6-2 to answer the following question(s). Refer to Table 6-2. What is the numerical value of the price elasticity of supply? A.0 B.greater than 0 but less than 1 C.1 D.greater than 1

B

Under rent control, tenants can expect: a. lower rent, with housing quality remaining the same b. lower rent and lower quality housing. c. lower rent and higher quality housing. d. higher rent and a surplus of rental housing.

C

Use Figure 6-6 to answer the following question(s). Figure 6-6 Refer to Figure 6-6. The supply of dorm rooms on Sam's campus this school year is best represented by which diagram? A. Graph C B. none of these C.Graph B D. Graph A

A

Using the midpoint formula, calculate the price elasticity of portable air conditioners if an increase in price from $300 to $360 leads to an increase in the quantity supplied from 10,000 to 14,000. A.1.83 B.0.16 C.1.5 D.0.09

B

What is the impact of a given shift in demand when supply is relatively more elastic? A. No change in price. B. A smaller increase in price. C. A percentage change in quantity exactly equal to a given percentage change in price. D. A larger increase in price.

B

When an economist says that the demand for a product has increased, this means that: A. the product has become particularly scarce for some reason. B. consumers are now willing to purchase more of this product at each possible price. C. product price has fallen and as a consequence consumers are buying a larger quantity of the product. D. the demand curve has shifted to the left.

D.

When an increase in the quantity demanded is not large enough to make up for a decrease in price, total revenue falls. Which graph is more applicable to this statement? A. Both graphs. B. Neither graph. C. The graph on the right. D. The graph on the left.

A

When is demand price elastic? Selected Answer: A. When the percentage change in quantity demanded is greater than the percentage change in price . B. When the percentage change in quantity demanded is unrelated to the percentage change in price. C. When the percentage change in quantity demanded is less than the percentage change in price. D. When the percentage change in quantity demanded is equal to the percentage change in price.

D

When quantity demanded is completely unresponsive to price, what is the value of price elasticity of demand? A. 1. B. A negative number. C. A number between zero and 1. D. Zero.

B

When the government uses price supports in agriculture: a. buyers and sellers both gain, only the taxpayer loses b. government sometimes buys up the extra food that is produced c. sellers gain but less food is produced d. buyers get the product at discount prices

B

When the price ceiling applies in this market and the supply curve for gasoline shifts from S1 to S2, a. the market price will increase to P3. b. a shortage will occur at the new market price of P2. c. a surplus will occur at the new market price of P2. d. the market price will stay at P1.

D

When the price ceiling applies in this market and the supply curve for gasoline shifts from S1 to S2, the resulting quantity of gasoline that is bought and sold is a. at least Q1. b. Q3. c. between Q1 and Q3. d. less than Q3

A

When two goods are substitutes, which of the following occurs? A. An increase in the price of good X leads to an increase in the quantity demanded of good Y. B. An increase in the price of good X leads to a decrease in the quantity demanded of good Y. C. An increase in the price of good X leads to a decrease in the quantity demanded of good X. D. An increase in the price of good X leads to an increase in the price of good Y

D

When two goods, X and Y are complements, which of the following occurs? A. An increase in the price of good X leads to an increase in the price of good Y. B. An increase in the price of good X leads to an increase in the quantity demanded of good Y. C. An increase in the price of good X leads to a decrease in the quantity demanded of good X. D. An increase in the price of good X leads to a decrease in the quantity demanded of good Y.

D

Which good has the most elastic demand? A.Gasoline in the short run. B.Gasoline in the long run. C.Shell gasoline in the short run. D.Shell gasoline in the long run.

A

Which is most likely to happen, were a price floor of $125 to be instituted in this market? A. The government could set a quota of 18.5 million printers, to prevent overproduction. B. The government could set a quota of 19.5 million printers, to prevent overproduction. C. The government could set a quota of 21.5 million printers, to prevent overproduction. D. The government could set a quota of 20.5 million printers, to prevent overproduction.

A

Which of the following goods is likely to have the most elastic demand? A.Restaurant Meals. B.Sunscreen. C.Insulin. D.Salt.

B

Which of the following is a true statement? A. The more substitutes available for a product, the greater the price elasticity of demand. B. All of the above. C. The demand curve for a luxury is more elastic than the demand curve for a necessity. D. The more time that passes, the more elastic the demand for a product becomes.

A

Which of the following is not likely to happen when a rent control is in place? A.an increase in the supply of rentals B.spending more time searching for housing C.a "black market" for rentals D.longer waiting lists for rentals

C

Which of the following is the definition of producer surplus? A. The difference between the highest price a consumer is willing to pay and the price the consumer actually pays. B. The additional benefit to a consumer from consuming one more unit of a good or service. C. The difference between the lowest price a firm would have been willing to accept and the price it actually receives. D. The additional cost to a firm of producing one more unit of a good or service.

A.

Which of the following is true if demand is inelastic? A. The price elasticity of demand will be less than 1 in absolute value. B. The percentage in price will be less than the percentage change in quantity demanded. C. There are many substitutes for the good in question. D. All of the above.

D

Which of the following statements about total revenue is correct? A. The effect of price changes on total revenue depends on the cost of the goods sold. B. When the price of a good is lowered, total revenue will necessarily decline. C. When the price of a good is lowered, total revenue will rise because more is sold. D. The effect of price changes on total revenue depends on the price elasticity of demand.

C

Which of the following statements is correct? a. A price ceiling set at $5 will be binding and will result in a shortage of 75 units. b. A price ceiling set at $5 will be binding and will result in a shortage of 50 units. c. A price ceiling set at $5 will be binding and will result in a shortage of 125 units. d. A price ceiling set at $5 will not be binding.

A

Which of the following statements is correct? a. A price ceiling set at $6 will be binding and will result in a shortage of 8 units. b. A price ceiling set at $16 will be binding and will result in a shortage of 12 units. c. A price ceiling set at $16 will be binding and will result in a shortage of 6 units. d. A price ceiling set at $6 will be binding and will result in a shortage of 4 units.

C

Which of the following statements is correct? a. A price floor set at $16 will be binding and will result in a surplus of 6 units. b. A price floor set at $6 will be binding and will result in a surplus of 8 units. c. A price floor set at $16 will be binding and will result in a surplus of 12 units. d. A price floor set at $6 will be binding and will result in a surplus of 4 units.

C

With the rent control, the quantity supplied is Q1. Suppose apartment owners ignore the law and rent this quantity for the highest rent they can get. What is the highest rent they can get? A.R0 B.it could be any rent they desire C.R1 D.R*

A

You have responsibility for economic policy in the country of Freedonia. Recently, the neighboring country of Sylvania has cut off all exports of oranges to Freedonia. Harpo, who is one of your advisors, suggests that you should impose a binding price ceiling in order to avoid a shortage of oranges. Chico, another one of your advisors, argues that without a binding price floor, a shortage will certainly develop. Zeppo, a third advisor, says that the best way to avoid a shortage of oranges is to take no action at all. Which of your three advisors is most likely to have studied economics? a. Zeppo b. Harpo c.A shortage will develop under any circumstance, since there are no more oranges being imported into the country from Sylvania. d. Chico

D

n the apartment market, what happens when: Zoning laws are relaxed, increasing the land that can be used to build apartments. A. Supply shifts left, P rises and Q falls B. Demand shifts right, P rises and Q rises C. Demand shifts left, P falls and Q falls D. Supply shifts right, P falls and Q rises