ECON 2302 -PRACTICE EXAM 1
results in a movement upward and to the left along a demand curve
A decrease in quantity demanded
supply curve to the right
A improvement in production technology will shift the
supply curve for Ashley's bread will increase
Ashley bakes bread that she sells at the local farmer's market. If she purchases a new convection oven that reduces the costs of baking bread, the
scarcity
Economics deals primarily with the concept of
buyers cannot buy all they want to buy at the price ceiling
If a price ceiling is a binding constraint on a market, then
zero, and the supply curve is vertical
If sellers do not adjust their quantity supplied at all in response to a change in price, the price elasticity of supply is
40 percent decrease in the quantity demanded
If the price elasticity of demand for a good is 4.0, then a 10 percent increase in price results in a
Both a and b are correct
In a market economy, a) households decide which firms to work for and what to buy with their incomes. b)firms decide whom to hire and what to make. c)a central planner makes decisions about production and consumption. d)Both a and b are correct.
conduct laboratory experiments
In conducting their research, economists face an obstacle that not all scientists face; specifically, in economics, it is often difficult and sometimes impossible to
Panel (b)
Refer to the above figure Which of the four panels represents the market for winter coats as we progress from winter to spring?
binding price floor that creates a surplus
Refer to the above figure. A government-imposed price of $12 in this market is an example of a
an expectation by buyers that their incomes will increase in the very near future
Refer to the above figure. Which of the following would cause the demand curve to shift from Demand A to Demand B in the market for golf balls in the United States? A)a decrease in the price of golf balls B)an increase in the price of green fees C)an expectation by buyers that their incomes will increase in the very near future D)a change in consumer tastes away from golf and toward tennis
a change in consumer preferences toward watching movies in movie theaters rather than at home
Refer to the above figure. Which of the following would cause the demand curve to shift from Demand C to Demand A in the market for DVDs? A)an increase in the price of DVDs B)a decrease in the price of DVD players C)a change in consumer preferences toward watching movies in movie theaters rather than at home D)an expectation by buyers that their incomes will increase in the very near future
Panel (c)
Refer to the above figure. Which of the four panels represents the market for cars as a result of the adoption of new technology on assembly lines?
Panel (d)
Refer to the above figure. Which of the four panels represents the market for peanut butter after a major hurricane hits the peanut-growing south?
5 wallets for 3.75 purses
Refer to the above graphs. At which of the following prices would both Hosne and Merve gain from trade with each other? A)5 wallets for 1.25 purses B)5 wallets for 2.5 purses C)5 wallets for 3.75 purses D)Hosne and Merve could not both gain from trade with each other at any price.
purses and Merve has a comparative advantage in the production of wallets
Refer to the above graphs. Hosne has a comparative advantage in the production of
both goods and Merve has an absolute advantage in the production of neither good
Refer to the above graphs. Hosne has an absolute advantage in the production of
beef and Zardia should specialize in the production of wheat
Refer to the above table. Andia should specialize in the production of
4 bushels of wheat and 5 pounds of beef
Refer to the above table. Assume that Andia and Zardia each has 60 minutes available. If each person spends all his time producing the good in which he has a comparative advantage, then total production is
12 bushels of wheat for 19 pounds of beef
Refer to the above table. At which of the following prices would both Andia and Zardia gain from trade with each other? A)6 bushels of wheat for 10.5 pounds of beef B)12 bushels of wheat for 19 pounds of beef C)24 bushels of wheat for 34 pounds of beef D)Andia and Zardia could not both gain from trade with each other at any price.
5/3 pounds of beef
Refer to the above table. What is Andia's opportunity cost of producing one bushel of wheat?
$980
Refer to the above. The amount of the tax revenue raised is
$10
Refer to the above. The effective price that sellers receive after the tax is imposed is
$8
Refer to the above. The per-unit burden of the tax on buyers is
binding price ceiling that creates a shortage
Refer to the figure on the previous page. A government-imposed price of $6 in this market is an example of a
70 notepads and 0 lamps.
Refer to the previous graph. If this economy devotes all of its resources to the production of notepads, then it will produce
None of the above; the economy cannot move from point W to point V
Refer to the previous graph. The opportunity cost of obtaining 20 additional lamps by moving from point W to point V is a)0 notepads. b)10 notepads. c)50 notepads. d)None of the above; the economy cannot move from point W to point V.
decrease in the demand for printers and a decrease in the quantity supplied of printers
Suppose buyers of computers and printers regard the two goods as complements. Then an increase in the price of computers will cause a(n)
-1.0, and X and Y are complements
Suppose that when the price of good X falls from $10 to $8, the quantity demanded of good Y rises from 20 units to 25 units. Using the midpoint method, the cross-price elasticity of demand is
quantity demanded of toothpaste decreases, and the quantity of toothpaste that firms want to supply increases
Suppose the equilibrium price of a tube of toothpaste is $2, and the government imposes a price floor of $3 per tube. As a result of the price floor, the
Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous
Suppose the number of buyers in a market increases and a technological advancement occurs also. What would we expect to happen in the market?
elastic because there are many close substitutes for Hubba Bubba
The demand for Hubba Bubba bubble gum is likely
buyers' responsiveness to a change in the price of a good
The price elasticity of demand measures
longer the time period being considered
The supply of a good will be more elastic, the
-2.33, and hot dogs are an inferior good
Tyler purchases 5 pounds of hot dogs per month when his monthly income is $2,000 and 4 pounds of hot dogs per month when his monthly income is $2,200. Tyler's income elasticity of demand for hot dogs is
with shortages and waiting lists, they have no incentive to maintain and improve their property
Under rent control, landlords cease to be responsive to tenants' concerns about the quality of the housing because
price no longer serves as a rationing device
When a binding price ceiling is imposed on a market
an increase in total revenue
When demand is inelastic, an increase in price will cause
1.06
When the price of a bracelet was $25 each, the jewelry shop sold 20 per month. When it raised the price to $35 each, it sold 14 per month. Using the midpoint method, the price elasticity of demand for bracelets is about
once an economy has reached the efficient points on its production possibilities frontier, the only way of getting more of one good is to get less of the other
Which of the following trade-offs does the production possibilities frontier illustrate? A)if an economy wants to increase efficiency in production, then it must sacrifice equality in consumption B)once an economy has reached the efficient points on its production possibilities frontier, the only way of getting more of one good is to get less of the other C)for an economy to consume more of one good, it must stop consuming the other good entirely D)for an economy to produce and consume goods, it must sacrifice environmental quality
a shortage of the good
Which of the following would cause price to increase?