Econ Final Test 1

25. Using the following equations, determine the impact of a $1.00 price ceiling. Qd = 50 - 3P Qs = 40 + 2P A. There will be a shortage of 5 units. B. There will be a surplus of 5 units. C. There will be a shortage of 10 units. D. There will be no effect.

A

3. Refer to Figure 2-2. When the economy moves from Point A to Point B in the diagram above: A. the economy begins using its resources efficiently to produce both food and clothing. B. the economy operates beneath productive capacity once it reaches Point B. C. the economy decreases production of both clothing and food. D. the economy is trading with other economies.

A

1. The circular flow diagram of economic activity is a model of the: A. flow of goods, services, and payments between households and firms. B. influence of government on business behaviour. C. role of unions and government in the economy. D. interaction among taxes, prices, and profits.

A

19. Refer to Figure 4-1. The movement from __________ to __________ is consistent with a decrease in the price of cotton (a substitute). A. Point A; Point H B. Point A; Point D C. Point A; Point F D. Point A; Point B

A

20. Using the following equations, solve for market equilibrium price. Qd = 50 - 3P Qs = 40 + 2P A. 2 B. 5 C. 10 D. 45

A

Figure 2-2 2. Refer to Figure 2-2. At Point A in the production possibilities graph shown above, the economy: A. is not using its resources efficiently. B. is using its resources efficiently while producing clothing but no food. C. is using its resources efficiently while producing food but no clothing. D. is using its resources efficiently to produce both food and clothing.

A

12. Many cooks view butter and margarine to be substitutes. If the price of butter rises, then in the market for margarine: A. the equilibrium price will fall and the equilibrium quantity will fall. B. both the equilibrium price and quantity will rise. C. the equilibrium price will rise and the equilibrium quantity will decrease. D. the equilibrium price will rise, while the change to equilibrium quantity is indeterminate.

B

13. The supply curve of textbooks (which are produced using paper made from trees) will shift to the left in response to: A. a decline in college tuition. B. a sharp increase in the demand for and construction of wood-frame homes. C. an increase in the supply of lumberjacks. D. an end to government regulations that limit timber harvesting in national forests.

B

14. Steel mill wage costs increase by 18 percent over a year. What is the likely economic effect on the market for steel? A. There is an increase in the cost of producing steel, which shifts the supply curve of steel to the right, thereby increasing the price of steel. B. There is an increase in the cost of producing steel, which shifts the supply curve of steel to the left, thereby increasing the price of steel. C. There is a decrease in the cost of producing steel, which shifts the supply curve of steel to the left, thereby increasing the price of steel. D. The increase in wage costs will shift the demand curve for steel to the left, increasing the cost of steel.

B

16. How do apple growers react to the news of medical research findings that suggest that eating apples leads to greater health benefits than were previously known? A. They increase the supply of apples. B. They increase the quantity of apples supplied. C. They decrease the supply of apples. D. They decrease the quantity of apples supplied.

B

23. Using the following equations, determine the impact of a $4.50 price floor. Qd = 50 - 3P Qs = 40 + 2P A. There will be a shortage. B. There will be a surplus. C. There will be both a surplus and a shortage. D. There will be no effect.

B

24. Using the following equations, determine the impact of a $4.00 price floor. Qd = 50 - 3P Qs = 40 + 2P A. There will be a shortage of 10 units. B. There will be a surplus of 10 units. C. There will be both a surplus and a shortage. D. There will be no effect.

B

4. Scarcity implies that: A. consumers would be willing to purchase the same quantity of a good at a higher price. B. it is impossible to completely fulfill the unlimited human desire for goods and services with the limited resources available. C. at the current market price, consumers are willing to purchase more of a good than suppliers are willing to produce. D. consumers are too poor to afford the goods and services available.

B

5. One of the scarce goods we discussed specifically in class is: A. oil. B. water. C. lumber. D. wheat.

B

Figure 4-1 18. Refer to Figure 4-1. The movement from __________ to __________ is consistent with a successful advertising campaign that claims wool keeps you warm. A. Point A; Point B B. Point A; Point F C. Point A; Point D D. Point A; Point H

B

11. When consumers and businesses have greater confidence that they will be able to repay in the future, _______________________. A. the quantity demanded of financial capital at any given interest rate will remain unchanged. B. the quantity demanded of financial capital at any given interest rate will shift to the left. C. the quantity demanded of financial capital at any given interest rate will shift to the right. D. the quantity demanded of financial capital at any given interest rate will achieve equilibrium.

C

15. A more efficient means of processing algae to produce an anticancer drug is discovered. As a result, the supply curve for the drug will: A. shift to the right, increasing the price of the drug. B. shift to the left, increasing the price of the drug. C. shift to the right, decreasing the price of the drug D. shift to the left, decreasing the price of the drug.

C

17. Whenever there is a shortage at a particular price, the quantity sold at that price will equal: A. the quantity demanded at that price. B. the quantity supplied minus the quantity demanded. C. the quantity supplied at that price. D. (quantity demanded plus quantity supplied)/2.

C

6. Improvements in the productivity of labor will tend to: A. decrease wages. B. decrease the supply of labor. C. increase wages. D. increase the supply of labor.

C

7. Which of the following will not result in a leftward shift of the market demand curve for labor? A. a decrease in labor productivity B. a decrease in demand for the firm's product C. an increase in the wage rate D. a decrease in the firm's product price

C

9. Which of the following will not result in a rightward shift of the market supply curve for labor? A. a decrease in non-wage income B. an increase in the working-age population C. an increase in labor productivity D. an increase in immigration

C

10. Other things being equal, a __________ supply of workers tends to __________ real wages. A. smaller; not change B. larger; increase C. smaller; decrease D. larger; decrease

D

21. Using the following equations, solve for market equilibrium quantity. Qd = 50 - 3P Qs = 40 + 2P A. 2 B. 5 C. 10 D. 45

D

22. Using the following equations, determine the impact of a $1.50 price floor. Qd = 50 - 3P Qs = 40 + 2P A. There will be a shortage. B. There will be a surplus. C. There will be both a surplus and a shortage. D. There will be no effect.

D

8. Which of the following results in a rightward shift of the market demand curve for labor? A. a decrease in labor productivity B. a decrease in the firm's product price C. an increase in the wage rate D. an increase in demand for the firm's product

D