Econ Midterm

Which statement is positive? Which statement is normative? I. Government spending on defense was $500 billion in 2019. II. The federal government should spend more on defense to protect use from our enemies a.) I is positive; II is normative b.) I is positive; II is positive C.) I is normative; II is positive d.) I is normative; II is normative

a.) I is positive; II is normative

A local hardware store benefits when a new automobile plant moves to town and hires workers because the a.)new jobs at the plant will increase local incomes, some of which will be spent at the hardware store b.) new plant will eliminate scarcity in the area c.) presence of a new plant will guarantee that resources are used efficiently

a.) New jobs at the plant will increase local incomes, some of which will be spent at the hardware store

There is a trade-off between____ and efficiency in that policies designed to promote equity often come at the cost of ______ efficiency: a.) equity; decreased b.) opportunity cost; decreased c.) equity; increased d.) opportunity cost; increased

a.) equity; decreased

The demand for mochi, a Japanese ice cream, tends to be relatively elastic because: a.) for most people, there are many close substitutes for mochi ice cream b.) it costs so little c.) it must be consumed very quickly d.) it is only popular in summer

a.) for most people, there are many close substitutes for mochi ice cream

a simplified representation of a real situation that is used to better understand real-life situations is called a.) model b.) production possibility frontier c.) assumption d.) trade-off

a.) model

The provision of parking passes for people with disabilities often requires that there be more than enough parking spaces for disabled individuals. As a result, many parking spaces are vacant when they could be used by individuals without special passes. This scenario illustrates the: a.) trade-off between efficiency and equity b.) trade-off between efficiency and specialization c.) ability of markets to produce efficient and equitable outcomes d.) power of the market to produce equilibrium outcomes

a.) trade-off between efficiency and equity

Which factor would result in a movement along a demand curve? a.) your preferences switch from coffee to tea b.) more people start shopping at walmart c.) amazon opens more offline store fronts to complement its online component d.) incomes fall in a recession

a.) your preferences switch from coffee to tea

If the price of profiteroles decreases from $1.10 to $0.90 and the quantity demanded of profiteroles increases from 190 pastries to 210 pasteries, then the price elasticity of demand, computed by the midpoint method is: a.) 0 b.) 0.5 c.) 1 d.) 2

b.) 0.5

Consumers' willingness to pay for a good is used to derive the _____ for that good a.) producer surplus b.) consumer preference c.) supply curve d.) demand curve

b.) consumer preference

Which statement best illustrates the law of demand? a.) an increase in food prices encourages more individuals to buy more food as a result of scarcity b.) consumers buy more iphones because prices have fallen c.) tesla produces more cars as prices increase d.) fewer people visit disneyland because incomes have fallen

b.) consumers buy more iphones because prices have fallen

a consumer's willingness to pay for an additional unit of a good depends on the: a.) expected additional cost of consuming that unit of the good b.) expected additional benefit of consuming that unit of the good c.) size of the shortage of the good d.) size of the surplus of the good

b.) expected additional benefit of consuming that unit of the good

if demand is inelastic, the ____ effect dominates the ____ effect, and a(n) ______ in price will cause total revenue to rise a.) price; quantity; decrease b.) price; quantity; increase c.) quantity; price; increase d.) quantity; price; decrease

b.) price; quantity; increase

the government of a small town has decided to ban public smoking on public sidewalks. This is an example of the principle that: a.) one person's spending is another person's income b.) when markets fail to achieve efficiency, government intervention can improve society's welfare c.) there are gains from trade d.) "how much" is a decision at the margin

b.) when markets fail to achieve efficiency, government intervention can improve society's welfare

The state of Massachusetts recently saw an increase in the price of elasticity of 10%, which brought about a fall in the quantity of electricity consumed of 2%. The price elasticity of demand is equal to ____, and demand is described as _____. a.) 0.2; inelastic b.) 5; inelastic c.) 0.2; elastic d.) 5; elastic

c.) 0.2; elastic

which factor would cause a supply curve to shift to the LEFT? a.) an increase in the number of firms selling a good b.) a technological improvement in the production of a good c.) an increase in the cost of an input used to produce a good d.) an increase in the price of a good

c.) an increase in the cost of an input used ot produce a good

The term opportunity cost implies that: a.) no trade-offs are possible b.) firms do not always exploit opportunities for profit c.) any decision regarding the use of a resource involves choosing between alternatives d.) individuals may make decisions that entail high costs

c.) any decision regarding the use of a resource involves choosing between alternatives

If people demand more netflix subscriptions when the price of hulu subscriptions falls, then netflix and hulu are: a.) not related b.) substitutes c.) complements d.) inferior goods

c.) complements

if the price of quinoa rises, we generally expect the: a.) quantity of quinoa demanded to rise b.) quantity of quinoa supplied to rise c.) demand of quinoa to fall d.) supply of quinoa to rise

c.) demand for quinoa to fall

property rights are an important feature of an effective market because they: a.) lead to the development of government control over prices b.) prevent harm to the environment from pollution c.) give owners of goods and services the right to use and dispose of those goods and services as they choose d.) are the basis for an equitable tax system

c.) give owners of goods and services the right to use and dispose of those goods and services as they choose

Economic signals a.) affect consumers' willingness to pay b.) lead to the creation of property rights c.) guide decision makers in their transactions in the marketplace d.) never provide adequate information to consumers

c.) guide decision makers in their transactions in the marketplace

The circular flow diagram illustrates how firms ____ good and services and _____ factors of production a.) buy; sell b.) buy; buy c.) sell; buy d.) sell; sell

c.) sell; buy

the basic concern in microeconomics is to: a.) ensure that the government pursures the public good during pandemics b.) make sure small businesses thrive c.) study the choices people make, given unlimited wants d.) determine how unlimited resources can best be used to satisfy limited wants

c.) study the choices people make, given unlimited wants

A competitive Market: a.) a market in which there are few buyers and seller of the same good or service b.) a market in which there are few buyers and many sellers of the same good or service c.) a market in which there are many buyers and few sellers of the same good or service d.) a market in which there are many buyers and many sellers of the same good or service

d.) a market in which there are many buyers and many sellers of the same good or service

if the supply curve for a given goos is horizontal, then we know that: a.) consumer surplus will be less than producer surplus b.) producer surplus will be zero c.) opportunity costs are not important anymore d.) greater than the opportunity cost of the good

d.) greater than the opportunity cost of the good

suppose oliver and felix each have a different skill set in producing two goods, cloth and corn. Each can produce both good simultaneously. In general, oliver is better at producing cloth, and felix is better at producing corn. Which principle of economics applies best to this scenario? a.) resources are scarce b.) oliver and felix have no incentive to specialize c.) oliver and felix could switch the goods in which they specialize d.) oliver and felix can both be made better off through specialization and trade

d.) oliver and felix can both be made better off through specialization and trade

when the price of big screen televisions decrease, the: a.) supply increases b.) quantity supplied increases c.) supply decreases d.) quantity supplied decreases

d.) quantity supplied decreases

the "other things equal" assumption means that: a.) the buyer alone is responsible for checking the quality and suitability of goods before purchase b.) all participants in the model start out with the same amount of money c.) utility is contant across similar consumers d.) relevant variables other than those examined do not change

d.) relevant variables other than those examined do not change

If ratatouille and Hungarian goulash are substitutes, a decrease in the price of Hungarian goulash will cause: a.) the demand for ratatouille to increase b.) the demand for Hungarian goulash to increase c.) the demand for ratatouille to decrease d.) the demand for Hungarian goulash to increase and the demand for ratatouille to decrease

d.) the demand for Hungarian goulash to increase and the demand for ratatouille to decrease

When price rises, quantity demanded falls. The price elasticity of demand measures a.) the percentage fall in price b.) how much the equilibrium price rises c.) the responsiveness of an income change to a price change d.) the responsiveness of a quantity change to a price change

d.) the responsiveness of a quantity change to a price change