Econ 211 Exam 1 Practice Questions

(Figure: Determining Surplus 2) In the graph, the consumer surplus is equal to . A) $12 B) $15 C) $25 D) $30 SEE PRACTICE QUESTION DOCUMENT TO SEE GRAPH. I DON'T HAVE QUIZLET PLUS, SO I COULDN'T UPLOAD IT. SORRY FOR ANY ISSUES.

B

(Figure: Predicting Demand Shifts 2) What would cause a shift from D1 to D2? A) a decrease in the price of honey B) a new virus that reduces the bee population C) a new study that shows that honey cures cancer D) a decrease in population SEE PRACTICE QUESTION DOCUMENT TO SEE GRAPH. I DON'T HAVE QUIZLET PLUS, SO I COULDN'T UPLOAD IT. SORRY FOR ANY ISSUES.

C

An effective price ceiling leads to: A) quantity supplied exceeding quantity demanded. B) quantity supplied equal to quantity demanded. C) quantity demanded exceeding quantity supplied. D) no effect on the market.

C

Which of these is NOT an economic factor of production? A) land B) entrepreneurial ability C) money D) labor

C

Willingness to pay is the: A) price a consumer pays for a good or service. B) price that all the consumers in a market pay for a good or service. C) highest value that a consumer believes a good or service is worth. D) highest value that a producer believes consumers will pay for his product.

C

(Figure: Bread and Honey) In the graph, a move from point a to point b costs: A) 70 jars of honey. B) 75 loaves of bread. C) 90 loaves of bread. D) 15 loaves of bread. SEE PRACTICE QUESTION DOCUMENT TO SEE GRAPH. I DON'T HAVE QUIZLET PLUS, SO I COULDN'T UPLOAD IT. SORRY FOR ANY ISSUES.

D

(Figure: Determining Surplus and Loss) In the graph, how much is deadweight loss at a price of $12? A) $0 B) $60 C) $80 D) $70 SEE PRACTICE QUESTION DOCUMENT TO SEE GRAPH. I DON'T HAVE QUIZLET PLUS, SO I COULDN'T UPLOAD IT. SORRY FOR ANY ISSUES.

D

(Figure: Interpreting Market Equilibrium) If the price were $20, then there would be a units and the pricewould . A) shortage of 4,000; fall B) shortage of 2,000; rise C) surplus of 4,000; fall D) surplus of 2,000; fall SEE PRACTICE QUESTION DOCUMENT TO SEE GRAPH. I DON'T HAVE QUIZLET PLUS, SO I COULDN'T UPLOAD IT. SORRY FOR ANY ISSUES.

D

(Table: Production Possibilities Schedule) In the table, if society wants to increase production of HDTVs from1,000 units to 2,000 units, the opportunity cost of doing so will be: A) 500 iPads B) 4,500 iPads. C) 3,500 iPads. D) 1,000 iPads. SEE PRACTICE QUESTION DOCUMENT TO SEE GRAPH. I DON'T HAVE QUIZLET PLUS, SO I COULDN'T UPLOAD IT. SORRY FOR ANY ISSUES.

D

A country operating outside of the production possibilities frontier is: A) operating efficiently. B) operating inefficiently and at an unattainable level. C) operating inefficiently but in an area that can be attained with proper use of resources. D) operating impossibly because a country cannot operate outside the production possibilities frontier.

D

Suppose the equilibrium price for a gallon of milk is $2.50, but due to government price supports, theminimum legal price is $2.75 per gallon. This price floor: A) causes a surplus of milk in the market. B) causes a shortage of milk in the market. C) has no impact on equilibrium in the market. D) results in quantity demanded exceeding quantity supplied.

A

When quantity demanded in a market equals quantity supplied, then the: A) market is in equilibrium. B) equilibrium price is less than expected by buyers. C) market will not clear without further price adjustments. D) market is in temporary disequilibrium

A

(Table) If the numbers in the table were placed on a graph, with hot chocolate sales on the vertical axis and temperature on the horizontal axis, a: A) positive, nonlinear curve would result. B) negative, linear relationship between temperature and hot chocolate sales would be shown. C) positive, linear relationship between temperature and hot chocolate sales would be shown. D) negative, nonlinear curve would result. SEE PRACTICE QUESTION DOCUMENT TO SEE TABLE. I DON'T HAVE QUIZLET PLUS, SO I COULDN'T UPLOAD IT. SORRY FOR ANY ISSUES.

B

A basic belief of economics is that: A) people always, and in every case, respond to economic incentives. B) in general, people respond to economic incentives. C) history shows that tax incentives rarely work. D) people do not respond to changes in costs and prices.

B

Which graph shows an increase in quantity supplied? SEE PRACTICE QUESTION DOCUMENT TO SEE GRAPH. I DON'T HAVE QUIZLET PLUS, SO I COULDN'T UPLOAD IT. SORRY FOR ANY ISSUES.

C

Tax burdens are higher on consumers when: A) supply and demand are elastic. B) demand and supply are inelastic. C) demand is elastic and supply is inelastic. D) demand is inelastic and supply is elastic.

D

(Table) According to the table, what is the price elasticity of demand for honey when the price of a jar of honey isbetween $2 and $4 (use the midpoint method to calculate your answer)? A) -0.33 B) -3.0 C) -0.5 D) -1.00 SEE PRACTICE QUESTION DOCUMENT TO SEE GRAPH. I DON'T HAVE QUIZLET PLUS, SO I COULDN'T UPLOAD IT. SORRY FOR ANY ISSUES.

A

A common definition of economics is that it is the study of: A) the allocation of scarce resources to satisfy competing wants. B) maximizing net personal disposable income. C) the factors underlying financial markets. D) maximizing personal financial wealth.

A

Capital includes all of these EXCEPT: A) dollar bills in a bank vault. B) copy machines in an insurance company. C) tractor loaders of a construction firm. D) drilling equipment at a tool-and-die company.

A

If a store sells a good with a highly elastic demand, then a decrease in the price would lead to: A) an increase in total revenue. B) a decrease in total revenue. C) a decrease in the quantity sold. D) no change in total revenue.

A

If the price increases by 100% and the quantity decreases by 50%, then the elasticity of demand is: A) -0.5. B) -2. C) -1. D) -5.

A

When economists refer to a market demand curve, they mean that it represents: A) the horizontal summation of individual demand curves. B) the vertical summation of individual demand curves. C) the quantity demanded by any individual consumer, multiplied by the number of consumers. D) None of the answers is correct.

A

Which is NOT considered a basic economic question? A) How will the system accommodate change? B) What goods and services will be produced? C) Who will receive the goods and services? D) How will these goods and services be produced?

A

(Table) Suppose an economy can produce the combinations of bread and cookies shown in the table. Theopportunity cost of increasing bread production from 25 loaves to 50 loaves is and theopportunity cost of increasing bread production from 50 loaves to 75 loaves is SEE PRACTICE QUESTION DOCUMENT TO SEE GRAPH. I DON'T HAVE QUIZLET PLUS, SO I COULDN'T UPLOAD IT. SORRY FOR ANY ISSUES.

B

A market economy is also known as a economy, and decisions are made by . A) capitalist; the government B) capitalist; private individuals C) socialist; the government D) socialist; private individuals

B

At any price below the equilibrium price: A) the quantity demanded equals the quantity supplied in the market. B) the quantity demanded exceeds the quantity supplied in the market. C) demand exceeds supply in the market. D) the quantity demanded is less than the quantity supplied in the market.

B

The price elasticity of demand measures the: A) change in quantity demanded divided by the change in price. B) percentage change in quantity demanded divided by the percentage change in price. C) slope of the demand curve. D) change in income divided by the change in price.

B

When market failure occurs, it often creates an incentive for: A) income equity across the market. B) government intervention into the market. C) more information. D) more competition to develop in the market.

B

When markets are efficient: A) the sum of consumer and producer surplus is minimized. B) the sum of consumer and producer surplus is maximized. C) consumer surplus is maximized, but producer surplus is minimized. D) consumer surplus is minimized, but producer surplus is maximized.

B

(Figure: Crop Yield and Fertilizer) The graph shows a hypothetical relationship between tons of fertilizer usedand crop yields. Which statement is NOT correct? A) The slope of the curve between one and two tons of fertilizer is approximately 2. B) The relationship between fertilizer usage and yield is nonlinear. C) Because the relationship is nonlinear, it is difficult to create an economic model describing the relationship between the two variables. D) Using more than three tons of fertilizer has minimal effect on yield. SEE PRACTICE QUESTION DOCUMENT TO SEE GRAPH. I DON'T HAVE QUIZLET PLUS, SO I COULDN'T UPLOAD IT. SORRY FOR ANY ISSUES.

C

(Figure: Determining Surplus and Loss) Consider the graph. If the price is raised from $8 to $12, consumer surplus: A) increases by $120 and deadweight loss increases by $60. B) increases by $20 and deadweight loss increases by $70. C) decreases by $120 and deadweight loss increases by $70. D) decreases by $20 and deadweight loss increases by $70. SEE PRACTICE QUESTION DOCUMENT TO SEE GRAPH. I DON'T HAVE QUIZLET PLUS, SO I COULDN'T UPLOAD IT. SORRY FOR ANY ISSUES.

C

(Figure: Impact of Tax on Market Equilibrium) Based on the graph, how much is the tax and who has the higher tax incidence? A) $10; buyers. B) $6; sellers. C) $6; buyers. D) $4; sellers. SEE PRACTICE QUESTION DOCUMENT TO SEE GRAPH. I DON'T HAVE QUIZLET PLUS, SO I COULDN'T UPLOAD IT. SORRY FOR ANY ISSUES.

C

(Figure: Mileage and Speed by Car Weight) Which statement about the graph is CORRECT? I. The heavier the vehicles, ceteris paribus, the lower the mileage. II. The higher the speed of the vehicle past 50 miles per hour, ceteris paribus, the lower the mileage. III. Weight and speed have a linear relationship with mileage. A) I only B) II only C) I and II D) I, II, and III SEE PRACTICE QUESTION DOCUMENT TO SEE GRAPH. I DON'T HAVE QUIZLET PLUS, SO I COULDN'T UPLOAD IT. SORRY FOR ANY ISSUES.

C

(Figure: Understanding Efficiency) In the graph, what is the sum of consumer and producer surplus? A) $30 B) $140 C) $50 D) $100 SEE PRACTICE QUESTION DOCUMENT TO SEE GRAPH. I DON'T HAVE QUIZLET PLUS, SO I COULDN'T UPLOAD IT. SORRY FOR ANY ISSUES.

C

Consider the following statements. Which, if any, are positive statements? I. Main Street needs more coffee shops. II. A new parking garage on campus will reduce parking congestion. III. Last winter, the state should have spent more money on snow removal. A) I B) I and II C) II only D) I, II, and III

C

If a price ceiling is set above the equilibrium price in the market, producer surplus will be: A) larger than it would be without the price ceiling. B) smaller than it would be without the price ceiling. C) the same as it would be without the price ceiling. D) impossible to calculate.

C

In a market-based economy, scarce resources are allocated by: A) political power. B) first come, first served. C) the price system. D) cooperative efforts to determine relative need.

C

Marginal analysis would put an emphasis on: A) total monetary costs and benefits. B) total opportunity costs and benefits. C) additional costs and benefits. D) total tangible costs and benefits.

C

Producer surplus is the difference between the: A) minimum price the buyer is willing to accept and the market price. B) maximum price the buyer is willing to accept and the market price. C) market price and the minimum price the seller is willing to accept. D) maximum price the seller is willing to accept and the market price.

C

Suppose your income falls from $35,000 to $33,000 and that your quantity demanded of a good increases from 40units to 55 units. The good is said to be a(n): A) normal good. B) substitute good. C) inferior good. D) luxury good.

C

Tax incidence is defined as: A) how federal and local taxes are collected. B) which goods and services are taxed. C) who bears the burden of a federal or local tax. D) who collects a federal or local tax.

C

The basic idea of opportunity cost is that: A) buyers miss opportunities to find better bargains. B) using resources in an activity imposes costs on other people. C) the decision to use resources in one activity means that the resources cannot be used elsewhere. D) economic agents are always looking for better opportunities.

C

The more responsive buyers are to a change in price, the: A) greater the price elasticity of supply. B) closer the price elasticity of demand is to one. C) greater the price elasticity of demand. D) smaller the price elasticity of demand.

C

When an economy is operating efficiently, the production of one more unit of a good will result in some loss ofproduction of another good because: A) technology can only improve the production of one good. B) the production possibilities frontier (PPF) shifts inward as more of only one good is produced. C) resources are limited and efficiency implies that all resources are already in use. D) consumers will not want more of both goods.

C

When the price of a good decreases from $10 to $8, the quantity supplied of the good decreases from 80 units to65 units. The price elasticity of supply is: A) 0.75. B) 0.80. C) 0.93. D) 0.60.

C

Which concept would be addressed by microeconomics? A) the national unemployment rate B) the reasons for a decline in a country's total output C) the price of college tuition that an individual student pays D) the inflation rate in Brazil

C

(Figure: Bran Muffins and Corn Flakes PPF) The graph shows the production possibilities frontier for a bakerythat makes corn flakes and bran muffins. Which statement is NOT correct? A) The opportunity cost of increasing production of corn flakes from 200 to 300 pounds is 50 pounds of bran muffins. B) Due to limited resources, there is a tradeoff between producing corn flakes and bran muffins. C) The graph implies that resources well-suited for making corn flakes are not as well-suited for producing branmuffins. D) The company faces decreasing opportunity costs. SEE PRACTICE QUESTION DOCUMENT TO SEE GRAPH. I DON'T HAVE QUIZLET PLUS, SO I COULDN'T UPLOAD IT. SORRY FOR ANY ISSUES.

D

Consider the demand for olive oil. What would happen to the demand for olive oil if a study confirming itsbeneficial health effects is published at the same time that an investigative report finds that much of the olive oilimported into the country is actually sunflower oil that has been dyed? A) We would expect demand to shift to the right. B) We would expect demand to shift to the left. C) We would expect demand not to change. D) We would expect demand to shift in each direction, but the final position will depend on which event has thebigger impact on demand.

D

When quantity supplied exceeds quantity demanded, a occurs and prices are pushed towardequilibrium. A) shortage; up B) shortage; down C) surplus; up D) surplus; down

D

Which example represents incentives for decisions? A) tax deductions for individual retirement accounts B) investment tax credits for businesses C) tax deductions for education saving accounts D) All of these are incentives.

D