EC 205 Final-Study Questions
How do you calculate the rate of inflation in a certain year?
(Target year CPI-Year-1 CPI)/Year-1 CPI
A benefit of markets is that they: a. allocate resources to their most valued uses. b. maximize profits for sellers. c. centralize decision making. d. maximize the number of consumer that can purchase a product.
A
After Shawna received a promotion and a raise, she used public transportation less and ridesharing services more. For Shawna, public transportation is a(n)_____ good, and ride-sharing is _____ good. a. inferior; a normal b. normal; an inferior c. inferior; also an inferior d. normal; also a normal
A
How do you find the amount of tax collected from a graph
Total Revenue = Price*Quantity Price = Price w/ Tax - Price w/o Tax Quantity = At equilibrium with tax
Deflation often occurs in times of _____. The FED tries to maintain _____. a. economic expansion; inflation of 2% b. economic boom; deflation of -1% c. recession; 0% inflation or deflation d. recession; inflation of 2%
D
On graphs how would you tell if they would show a scenario of no unemployment?
If the minimum wage is below the equilibrium point
If firms are competitive and profit-maximizing, the demand curve for labor ... a. shifts to the right when the population decreases. b. is derived from demand for the product that they make. c. shifts to the right when technology allows a firm to replace human labor with machines at a lower cost. d. is stable as there is no substitute for human labor.
B
As the owner of a kayak tour business was looking over her financial records, she noticed that when the shop down the street increased the price of stand-up paddleboard tours by 10%, kayak tour sales increased by 15%. Which of these is a TRUE statement? a. The cross elasticity of demand would be 15%/10% = 1.5, implying that the products are substitutes. b. The income elasticity of demand would be 10%/15% = 0.67, implying that the products are normal goods. c. The cross elasticity of demand would be 10%/15% = 0.67, implying that the products are substitutes. d. The income elasticity of demand would be 15%/10% = 1.5, implying that the products are normal goods.
A
Assume inflation rises unexpectedly to 10%. If a business borrowed money to pay for the new building that was just completed, would it benefit from the increase in inflation? a. Yes, because the business would repay the loan in less valuable dollars than it borrowed. b. No, because the business would replay the loan in the future. c. Yes, because they didn't have to pay to build the building. d. No, because inflation doesn't affect business. It only affects consumers.
A
Demand for Purina brand dog food would be _____ elastic than demand for dog food in general because the overall category contains _____ substitutes. a. more; many b. more; few c. fewer; many d. fewer; few
A
Human capital refers to: a. worker skills and knowledge. b. work done by machinery. c. machines that have artificial intelligence. d. money earned by workers in businesses.
A
If the GDP gap in the fourth quarter of 2021 was ____, this means ______. a. Negative; actual GDP < potential GDP b. Negative; potential GDP < actual GDP c. Positive; actual GDP < potential GDP d. 0, potential GDP must be 0
A
If the demand for a college education among low-income students is more elastic than the supply of college education, economic models tell us that the benefit of government grant (a subsidy) to help low-income students pay for college would ______. a. increase producer surplus more than consumer surplus. b. go entirely to low-income students, who use them to finance their education. c. be better spent on things with lower opportunity costs. d. increase producer surplus less than consumer surplus.
A
If the government were to impose a tax on movie downloads, the MOST likely effect would be: a. that consumers would pay a higher price, and producers would sell fewer movie downloads than before the tax. b. no change in consumption or in the prices paid by consumers of movie downloads. c. that consumers would pay a lower price, and producers would receive a higher price for movie downloads than before the tax. d. an increase in economic activity due to the tax.
A
If the output gap is positive such that actual GDP > potential GDP, the Federal Reserve will _____ the real interest rate to _____. a. raise; cool inflationary pressures b. lower; cool inflationary pressures c. raise; reduce unemployment d. lower; reduce unemployment
A
If you see that inflation this year is 5%, but it was 8% last year, this means ... a. the price level has risen over 10% in two years. b. on average, prices will be 3% lower this year than they were last year. c. the price level has increased but prices fell. d. on average, prices will increase this year, but they will decrease after that.
A
Jamal has a small business delivering firewood to ski resorts in Vermont. What would happen in the market for firewood if an invasive beetle infected forests across the northeast? a. The market supply curve would shift to the left, creating a shortage until a movement along the market demand curve reestablishes an equilibrium price and quantity. b. There would be a movement along the market supply curve, establishing a new, lower, equilibrium price, and quantity. c. The market demand curve would shift to the left, creating a surplus until a movement along the market supply curve reestablishes an equilibrium price and quantity. d. The market demand curve would shift to the right, creating a shortage until a movement along the market supply curve reestablishes an equilibrium price and quantity.
A
Let's say Joseph owns two businesses, one that sells draft beer at a professional hockey game AND a restaurant that sells Wendy's hamburgers. Assume the demand curve for Wendy's hamburgers is relatively elastic compared to the demand for draft beer at a hockey game. If Joseph needs extra cash at the end of the week, which product should be put on sale? a. Wendy's hamburgers b. Neither of them. c. Draft beer at a hockey game d. Both of them.
A
Much like toilet paper, toothpaste is a necessity. The income elasticity of demand for toothpaste is likely to be _____ and _____. a. positive; close to 0 b. positive; above 1 c. negative; close to 0 d. negative; below −1
A
Speculation can lead to _______ which is when the price of something rises in an unsustainable way. a. a bubble b. inflation c. inflationary gaps d. hyperinflation
A
What happens in the market for pears if the government imposes an excise tax on pears? a. The quantity of pears sold will decrease and the price of pears will increase. b. Producers will have to pay the entire tax because the market is so competitive. c. The market price of pears will increase by the amount of the tax. d. The economic surplus will grow because the government gets tax revenue.
A
When negative externalities exist, an unregulated market will produce _____ of the good, and the price will be _____ when compared to the socially optimal production. a. too much; too low b. the same amount; the same c. too little; too high d. too much; the same
A
Which business exhibits characteristics of a perfectly competitive firm? a. JorDawn cannot tell which farm the peaches he purchased came from because all the peaches look alike. b. Donelli's Pizza was voted the best pizza in town by readers of the local newspaper. c. People who want to open a bank in Kansas must obtain a charter from the U.S. Comptroller of the Currency or the state of Kansas. d. Devin's new software firm is spending a lot of money on research and development.
A
You are an economist for Quest Diagnostics, and you're analyzing the impact of competitor price changes. When LabCorp raises their price of a standard blood panel by 10%, and insurance companies have time to adjust, the quantity of blood panels demanded at Quest rises by 30%. The cross-price elasticity of demand is _____, indicating that Quest and LabCorp are _____. a. 3; close substitutes b. 0.33; substitutes c. 0.33; unrelated goods d. 3; complements
A For Cross Elasticity of Demand CED (Positive) --> Substitutes CED (Negative) --> Complements CED = 0 --> Unrelated CED>1 Elastic Substitutes CED<-1 Elastic Complements
If the price elasticity of demand is -0.1, then for every 10% increase in price, there is a _____ in quantity demanded. a. 1% decrease b. 100% increase c. 1% increase d. 100% decrease
A Price Elasticity = %Change in Quantity Demand/% Change in Price
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; 2.25 b. decrease; 11.11 c. increase; 4.55 d. increase; 5.45
A Price Elasticity = %Change in Quantity Demand/% Change in Price
After Giselle increased worker training at her company, the output per worker rose by 5%. What impact would this have on labor's marginal revenue product and her demand for labor? a. Both marginal revenue product and demand for labor would decrease. b. Both marginal revenue product and demand for labor would increase. c. Marginal revenue product would rise, and demand for labor would decrease. d. Marginal revenue product would decrease, and demand for labor would increase.
B
Consider these claims concerning the Affordable Care Act (a.k.a. Obamacare) in 2009-10: (i) In the late 2000s, the number of uninsured Americans hit a record high of 60 million. (ii) The Affordable Care Act provided the best fit to the mix of public and private institutions that make up the American health care system. (i) reflects _____ analysis and (ii) reflects _____ analysis. a. normative; positive b. positive; normative c. normative; normative d. positive; positive
B
Higher education tends to lead to higher salaries because education: a. enables graduates to repay loans. b. increases productivity. c. requires time to acquire. d. confers on one a higher social status.
B
If actual GDP is $43 million and potential GDP is $44 million, which statement below is true? a. There is an inflationary gap of $1 million b. There is a recessionary gap of $1 million c. Real GDP is $1 million d. Nominal GDP is $1 more than Real GDP
B
Which of the following does the Federal Reserve control directly? (i) inflation (ii) unemployment (iii) output (iv) real GDP a. (i) and (ii) b. (ii) and (iii) c. (i), (ii), (iii), and (iv) d. None of the above
D
If nominal GDP in 2022 is _____ Real GDP in 2022, this means ______. a. equal to; prices are lower in 2022 than in the base year. b. greater than; prices are higher in 2022 than in the base year. c. less than; prices are higher in 2022 than in the base year. d. greater than; prices are lower in 2022 than in the base year.
B
If the government imposes a $15 tax on wine, and the price of wine increases by $12: a. the government will receive less tax revenue than anticipated. b. consumers are paying more of the tax than producers are. c. producers are paying more of the tax than consumers are. d. the quantity of cheap wine sold will increase.
B
In a labor market, the wage is a. what employers receive. b. the price of labor. c. what workers pay. d. the quantity of labor
B
The marginal revenue product is equal to the marginal a. revenue multiplied by output. b. product of labor multiplied by the price of that product. c. product of labor multiplied by the wage. d. revenue multiplied by the wage.
B
What will happen in the labor market for commercial truck drivers if the government raises the requirements needed to obtain a commercial driver's license? a. The demand for truck drivers will decrease, resulting in a lower wage and lower quantity of labor. b. The supply of truck drivers will decrease, resulting in a higher wage and lower quantity of labor. c. The demand for truck drivers will increase, resulting in a higher wage and higher quantity of labor. d. The supply of truck drivers will increase, resulting in a lower wage and higher quantity of labor.
B
When a U.S. consumer buys Canadian maple syrup at the grocery store, this purchase is: a. a transfer payment. b. an import. c. gross domestic product. d. an export
B
Which of the following is NOT part of the rationale for efficiency wages? a. An efficiency wage encourages workers to work harder to avoid risking losing their jobs. b. An efficiency wage rewards worker productivity with higher pay. c. An efficiency wage raises the gain to workers for working more. d. An efficiency wage helps workers feel valued
B
Which of the following is included in GDP? a. When Joe buys a used car from Fran. b. When Kiya has to stay in the hospital for a week. c. When Grandpa keeps the grandchildren as a gift to his daughter. d. When the life expectancy for women in society increases
B
Which of the following people can be classified as "unemployed"? a. Damien, who does not have a job but has not looked for work b. Laura, who has been seeking employment for two months c. Fred, who is on medical leave from his job d. Jose, who is in the military
B
Which statement below explains the difference in disinflation and deflation? a. There is no difference in disinflation and deflation. They are the same thing. b. Disinflation means prices are rising slower than before, and deflation means purchasing power of the dollar is increasing. c. Disinflation means prices are falling, and deflation means inflation is getting smaller. d. Disinflation means prices are rising faster, and deflation means inflation in slowing
B
If Malaysia's GDP is approximately $315 billion, and its population is 32 million, what is its approximate GDP per capita? a. $101 b. $9,844 c. 10.1% d. $283 million
B GDP per Capita = GDP/Population
If a product's price rises by 6% and its quantity demanded falls by 8%, then its price elasticity of demand is equal to a. -6.00. b. -1.33. c. -0.75. d. -2.00
B Price Elasticity of Demand = %Change in Quantity/%Change in Price
A characteristic that distinguishes monopolistic competition from perfect competition is a. many buyers and sellers. b. no long-run economic profits. c. differentiated products. d. no barriers to market entry or exit.
C
Assume Jamison normally makes a total revenue of $100 per day selling socks for $5 a pair, and the price elasticity of demand for socks is -2.0. A reduction of 20% in the price of socks will bring __________ per day. a. a decrease in the quantity of socks he sells b. a price too low to make any total revenue c. an increase in total revenue d. a decrease in total revenue
C
Cyclical unemployment is unemployment: a. that occurs because wages don't fall to bring labor demand and labor supply into equilibrium. b. that occurs because of seasonal changes. c. due to the time it takes for employers to search for workers and for workers to search for jobs. d. due to a temporary downturn in the economy.
C
Francis and Frances just graduated from NC State and moved to Boston to look for jobs in their field of study. Which statement below is true? a. Neither of them are unemployed because they just graduated. b. They are cyclically unemployed because there is friction in the structural market. c. They are frictionally unemployed because they have the skills & training needed for the jobs they want to get. d. They are structurally unemployed because they have never had a job
C
In the 2 hours between classes a student can do one of three things, ranking them from most to least desirable as: (1) chat with friends, (2) study economics, or (3) eat lunch. This student's opportunity cost of chatting with friends is: a. the total value of studying economics and eating lunch. b. nothing because students do not pay their friends to chat with them. c. the value of studying economics. d. the value of chatting with friends.
C
Jeanine is willing to pay up to $16 per month for a Netflix subscription. She buys Netflix's basic plan in 2020, when the price is $14 per month. When the price rises to $15.50 per month in January of 2022, Jeanine's monthly consumer surplus from Netflix falls by: a. $1.00. b. $16.00 c. $1.50. d. $14.00
C
Katie is much faster than her husband, Brett, at putting up a tent and starting a fire. Who should take care of these tasks on their camping trip if they want to maximize their time sitting around a campfire? a. They should complete both tasks together, sharing all the work. b. Katie should complete both tasks because she is a more efficient worker. Brett could watch and learn from her. c. They each have a comparative advantage in a particular task, and they should focus on doing that. Katie can help Brett when she finishes her task. d. Katie should be in charge, directing the work while Brett does it.
C
Normal profit is equal to a. revenue minus opportunity cost. b. explicit cost minus implicit cost. c. zero economic profit. d. revenue minus explicit cost
C
Otto manages a consulting firm. If Otto wants his employees to produce as much as possible from the resources available, how should tasks be assigned? a. Each employee should be cross-trained in all tasks to increase flexibility in assignments. b. Each task should be assigned to the employee who can do it at the highest absolute advantage. c. Each task should be assigned to the employee who can do it at the lowest opportunity cost. d. The employee who is best at each task should be the one assigned to do it
C
The circular flow diagram of the economy tells us... a. how the government intervenes in the market economy. b. that firms pay more for labor than households pay for goods and services. c. how households and firms interact in the goods and services market and the labor market. d. how macroeconomic decisions change household purchasing.
C
The free rider problem is that a. people tend to overuse public transportation if it is offered free of charge. b. consumers will consume free items before consuming items that have a price. c. if people cannot be prevented from consuming a certain good, they have little incentive to pay for it. d. there is a tendency for people to consume too much of a good if they are charged a fixed price.
C
The market price of cruise ship vacations has increased recently. Some economists suggest that the price increased because of an increase in the number of retirees. In other words, they believe that: a. supply increased. b. supply decreased. c. demand increased. d. demand decreased
C
The opportunity cost of a choice is: a. the difference between the benefits and costs of the choice. b. sometimes positive or negative. c. the value of the opportunities lost. d. the net value of the opportunities gained.
C
The term gains from trade means the: a. total surplus in a market. b. higher prices that firms get when they sell abroad rather than in home markets. c. benefits that come from reallocating resources, goods, and services to better uses. d. alliances that nations make with each other when trade occurs between them.
C
True or False? It is important for the members of the Board of Governors of the Federal Reserve to have longer terms in office than elected officials. a. False, the Federal Reserve has nothing to do with the health of the economy. b. False, it doesn't matter if the Federal Reserve is insulated from political forces because they are separate from the U.S. Treasury. c. True, the Federal Reserve's independence prevents drastic swings in monetary policy with every new administration and allows policy decisions to be made only on economic grounds. d. True, the Federal Reserve's independence prevents drastic swings in fiscal policy with every new administration and allows policy decisions to be made only on economic grounds.
C
What do economists mean by the term "scarcity?" a. The price of goods and services has nothing to do with consumer demand, only supply. b. Opportunity cost depends on supply, not demand. c. Human wants for goods and services exceed what is available because resources are limited. d. There are not enough goods available, so people have to wait in lines
C
When a good is nonrival and nonexcludable, it suffers from the _____ problem. a. marginal cost b. common resource c. free-rider d. partial good
C
When consumers are given more time to adjust to higher prices a. consumers can earn more income to spend on goods. b. demand becomes less elastic. c. consumers have more choices from which to select. d. consumers have fewer choices from which to select
C
When you buy a vacation home at the beach, what conditions result in gains from trade? In other words, when does economic surplus exist? a. only when you and the seller share equally in the net benefit generated by the transaction b. when the price of the home is at or above your marginal benefit and at or below the seller's marginal cost c. when the price of the home is at or below your marginal benefit and at or above the seller's marginal cost d. when the exchange is involuntary
C
Which of these is a positive externality? a. Production costs are reduced when waste disposal laws are not enforced. b. New car prices decrease when steel tariffs are removed. c. A star basketball player's presence on television increases revenue at sports bars. d. Assistance is given to disaster victims.
C
Which statements are TRUE about the natural rate of unemployment? 1. The natural rate of unemployment cannot be directly observed. 2. Neither fiscal nor monetary policy can reduce the natural rate of unemployment. 3. The natural rate of unemployment changes slowly over time. a. 1 and 3 only b. 2 only c. 1, 2, and 3 are true d. none are true. (1, 2, and 3 are false.)
C
You own and run a pie shop in Pittsburgh. Last month, you purchased $900 worth of flour, eggs, butter, sugar and fruit. In addition, you used about $300 worth of fruit that your grow in your own garden. Using these inputs, you made and sold 25 pies for $50 each. How much did your pie shop change GDP? a. GDP rises by $900 b. GDP rises by $2,450 c. GDP rises by $1,250 d. GDP rises by $2,150
C
You're an analyst for The North Face, and you're determining how various factors related to outdoor activities impact The North Face's product sales. When REI, a national outdoor store, reduces its membership fee by 20%, the quantity demanded of The North Face coats rises by 15%. The cross-price elasticity of The North Face coats and REI memberships is _____, and the two are _____. a. −0.75; unrelated b. 1.33; substitutes c. −0.75; complements d. 1.33; elastic
C
You own a factory that makes wasabi peas. Last month, you purchased $560,000 worth of wasabi paste, peas, cane sugar, palm oil and sea salt. Using these inputs, you made and sold 1 million snack bags of wasabi peas at $3.49 each. How much did GDP change? a. GDP rises by $4,050,000. b. GDP rises by $2,930,000. c. GDP rises by $3,490,000. d. GDP rises by $560,000.
C GDP includes only what you produced
Hours to Cook Chicken Pork Joyce 3.2 3 Damien 3 1 What will be the total output of chicken gumbo and pork chops if Joyce and Simeon each work for 24 hours on the task for which they each have a comparative advantage? a. Eight chicken gumbos and eight pork chops. b. 15.5 chicken gumbos and 32 pork chops. c. 7.5 chicken gumbos and 24 pork chops. d. 15.5 chicken gumbos and 24 pork chops.
C Opportunity Cost = Wanted Task #/Rest Task # = # (Units of Denominator per Units of Numerator) Ex) Opportunity cost for Joyce chicken =3.2 Chicken/3 Pork = 1.067 Pork per Chicken Lower Opportunity Cost = Comparative Advantage
In one year, real GDP increases by 27% while nominal GDP increases by 54%. What is the rate of inflation in that year? a. 14.58% b. 0.5% c. 27% d. 200%
C Rate of Inflation= Nominal GDP - Real GDP
Suppose the adult population over the age of 16 is 240 million and the labor force is 155 million (of whom 140 million are employed). What is the unemployment rate? a. 90.3% b. 6.25% c. 9.68% d. 41.67%
C Unemployment Rate = (Unemployed/Labor Force)*100%
Where are Consumer and Producer Surplus on a graph?
Consumer surplus is above the price line but below demand. Producer Surplus is below the price line but above supply.
A price taker is a firm that a. takes bribes. b. takes the maximum price that each and every consumer is willing to pay. c. has the ability to control the price it charges. d. has no control over the market price.
D
Allison and Robert own an upscale salon together, where the two most popular color styles clients request are highlights and balayages. Robert has an absolute advantage in both styles. Allison's opportunity cost for a balayage is 0.2 and for a highlight, 5.0. Robert's opportunity cost for a balayage is 0.6 and for a highlight, 1.6. Who should specialize in highlights? a. Allison, because she has a comparative advantage in balayages. b. Robert, because he has an absolute advantage in highlights. c. Allison, because she has a lower opportunity cost for balayages. d. Robert, because he has a lower opportunity cost for highlights
D
An over-the-air radio station that plays music for free is a(n) _____ good, while a streaming radio service that charges a subscription fee is a(n) _____ good. a. rival; nonrival b. excludable; nonexcludable c. nonrival; rival d. nonexcludable; excludable
D
Assume nominal GDP is $15,000 in 2007 and $14,500 in 2006. Also assume Real GDP is $15,500 in 2007 and $15,200 in 2006. What is the annual rate of inflation in 2007? a. 3.45% b. 1.97% c. 6.79% d. 1.48%
D
Assuming consumers eat stuffing with turkey at Thanksgiving, how will an Avian Flu outbreak affect the equilibrium price of stuffing? a. The equilibrium price of stuffing will not change. b. We cannot tell what will happen to the equilibrium price of stuffing because ceteris paribus is no longer true. c. The equilibrium price of stuffing will increase. d. The equilibrium price of stuffing will decrease.
D
Barlow and Rusia own a nail salon. A manicure takes Barlow 60 minutes to complete and takes Rusia 45 minutes to complete. A pedicure takes Barlow 45 minutes to complete and takes Rusia 30 minutes to complete. According to the theory of comparative advantage, who should specialize in pedicures? a. Barlow, because he is faster b. Rusia, because she is faster c. Barlow, because he has a lower opportunity cost d. Rusia, because she has a lower opportunity cost
D
Even if inflation exists, your purchasing power from one period to the next will stay intact if: a. you do not receive a pay rise. b. you buy the same goods and services that you bought last year. c. the rate of inflation is less than 1%. d. your pay rise exactly matches the rate of inflation.
D
If the local construction company buys an industrial 3D printer, this expenditure is: a. consumption. b. exports. c. government expenditure. d. investment
D
In general, rent controls set a rental price below the equilibrium price. Therefore... a. there is no surplus, as all units will be rented at a lower price. b. the quantity of rent-controlled apartments supplied exceeds the quantity demanded. c. the incidence of poverty is reduced. d. the quantity of rent-controlled apartments demanded exceeds the quantity supplied
D
Is it possible for GDP to rise (fall) while at the same time GDP per capita is falling (rising)? In other words, can GDP and GDP per capita move in opposite directions? a. Yes, If population grows faster than GDP, GDP increases while GDP per capita decreases. b. Yes, If GDP falls, but population falls faster, then GDP decreases while GDP per capita increases. c. Yes, If GDP falls, but population rises, the GDP increases while GDP per capita decreases. d. Answers A and B are correct. GDP and GDP per capita can move in opposite directions. e. None of the answers are correct. GDP and GDP per capita must move together.
D
Kellogg, General Mills, Post, and Quaker Oats dominate the cereal market. This industry, which has consistently displayed profits in the long run, is difficult to enter due to brand recognition. The cereal industry is an example of what type of market structure? a. monopolistic competition b. perfect competition c. monopoly d. oligopoly
D
The way in which different workers divide required tasks to produce a good or service is called ____. This leads to ____ a. Gains from Trade; Opportunity Cost. b. Opportunity Cost; Scarcity c. Production Possibilities; Scarcity. d. Division of Labor; Gains from trade
D
When a good is nonrival and nonexcludable, the good is referred to as: a. an external good. b. a free-ride benefit good. c. a private good. d. a public good.
D
When the government requires that a person have a license to work in a particular occupation, then in the labor market for that occupation: a. demand increases. b. supply increases. c. demand decreases. d. supply decreases.
D
Which statement below is correct? a. The main reason for employing expansionary fiscal policy during a recession is to keep prices from rising too quickly. b. The main reason for employing contractionary fiscal policy during a recession is to keep prices from rising too quickly. c. The main reason for employing contractionary fiscal policy during a recession is to increase employment. d. The main reason for employing expansionary fiscal policy during a recession is to increase employment.
D
You are considering whether to invest in your friend's business or keep your money in your savings account. What is the opportunity cost of investing in your friend's business? a. the amount of money your friend will repay you if they make a profit. b. foregone wages from not working c. your time d. interest you could have earned from the savings account
D
You are the manager at Pure Sweat Studio, a membership-based sauna club, assigning closing duties to your team members. In 12 minutes, Sadiquah can fold all of the clean towels needed for a sauna room for the next day's use. She can clean a sauna room in 9 minutes. Landon can fold the towels in 10 minutes or clean a room in 15 minutes. Landon's opportunity cost of cleaning saunas is _____ sets of towels. a. 1.33 b. 0.75 c. 0.67 d. 1.50
D
You eat M&Ms every day. When you go to the store to buy some, you find that M&Ms are more expensive than they were last month. Which statement could explain why M&Ms are more expensive? a. Consumers are now purchasing fewer M&Ms compared to other types of chocolates. b. A new robot has been installed at the Mars chocolate company that reduces the time needed to produce M&Ms by half. c. A new study finds that the benefits of eating chocolate are not as great as previously thought. d. The supply of cacao beans, used to produce chocolate, has fallen around the world.
D
You run a factory that makes leather shoes. You opt to pay your workers twice the going wage in order to reduce tardiness and shirking and to increase workers' morale and effort. This scenario is an example of: a. discouraged workers. b. cyclical unemployment. c. a minimum wage. d. an efficiency wage.
D
Your government wants to reduce the quantity of sugar that is sold in the market. Which of the options below is NOT a possible way of achieving this goal? a. taxing the purchase of sugar b. enacting a price ceiling below the equilibrium price. c. enacting a price floor above the equilibrium price. d. subsidizing the producers of sugar e. B and D would not work.
D
Which person below is unemployed? a. A parent who does not work to stay home with the kids. b. A senior citizen who is retired and living on social security. c. A full time student who does not have a job. d. A person who hasn't had a job in two years, but has interviews lined up. e. None of these people are unemployed.
D (If they are currently looking for work they are unemployed)
In 1971, when the consumer price index was 40.48, women earned a median income of $2,408 per year. If the consumer price index in 2012 was 229.6, how much was $2,408 in 2012 dollars? a. $2,408 b. $425 c. $29,076 d. $13,658
D Conversion = (Income*Modern CPI)/Old CPI
If soda and potato chips are complements, then their cross elasticity of demand is a. 0. b. positive. c. greater than 1. d. negative.
D For Cross Elasticity of Demand CED (Positive) --> Substitutes CED (Negative) --> Complements CED = 0 --> Unrelated CED>1 Elastic Substitutes CED<-1 Elastic Complements
Suppose that the quantity demanded of a product rises by 9% as incomes rise by 3%. What type of good is this product? a. inferior b. normal necessity c. substitute normal d. normal luxury
D Income Elasticity of Demand= %Change in Quantity Demand/%Percent Change in Income IED>1 --> Luxury IED>0 --> Normal IED<0 --> Inferior
When the price of water increased from $1 to $2 per bottle, the quantity demanded fell from 10,000 bottles a day to 9,000 bottles a day. What is the price elasticity of demand for bottles of water? a. -0.001 b. -0.10 c. -6.352 d. -0.158
D Remember for calculating the percent change it is (P2-P1)/(P2+P1) for Demand and Price
In December of 2018, West Virginia reported a civilian labor force of 784,574 people. The number of employed people was 744,178. What was the unemployment rate? a. 94.9% b. 4.9% c. 4.2% d. 5.1%
D Unemployment Rate = (Unemployed/Labor Force)*100%
The tragedy of the commons: a. applies to the destruction of nonrival, nonexcludable goods. b. explains the tendency to underconsume common resources. c. applies to the destruction of rival, excludable goods. d. explains the tendency to overconsume common resources. e. applies to rival and nonexcludable goods. f. Answers D and E are correct.
F
