Econ Exam 1

The Get-There-Safe Bus company incurs an average cost of $45 for each passenger it carries on its trip from Atlanta to Chattanooga. In advance of a particular trip, four seats remain unsold. Assume the marginal cost of an additional passenger is zero. The bus company could increase its profit if it a. charged any ticket price above $0 for the four remaining seats b. charged at least $11.25 for each of the four remaining seats c. charged at least $45 for each of the four remaining seats d. paid four people to occupy the four remaining seats

(A) Charged any ticket price above $0 for the four remaining seats

Suppose buyers of coffee and sugar regard the two goods as complements. Then an increase in the price of coffee will cause a(n) a. decrease in the demand of sugar and a decrease in the quantity supplied of sugar b. decrease in the supply of sugar and a decrease in the quantity demanded of sugar c. decrease in the equilibrium price of sugar and an increase in the equilibrium quantity of sugar d. increase in the equilibrium price of sugar and a decrease in the equilibrium quantity of sugar

(A) Decrease in the demand for sugar and a decrease in the quantity supplied of sugar

The terms equality and efficiency are similar in that they both refer to benefits to society. However they are different in that a. equality refers to uniform distribution of those benefits and efficiency refers to maximizing benefits from scarce resources b. equality refers to maximizing benefits from scarce resources and efficiency refers to uniform distribution of those benefits c. equality refers to everyone facing identical tradeoffs and efficiency refers to the opportunity cost of the benefits d. equality refers to the opportunity cost of the benefits and efficiency refers to everyone facing identical tradeoffs.

(A) Equality refers to uniform distribution of those benefits and efficiency refers to maximizing benefits from scarce resources

An improvement in production technology will shift the a. supply curve to the right b. supply curve to the left c. demand curve to the right. d. demand curve to the left

(A) Supply curve to the right

What will happen in the market for shotgun-shell ammunition now if buyers expect higher shotgun-shell prices in the near future? a. The demand for shotgun-shell ammunition will increase b. The demand for shotgun-shell ammunition will decrease c. The demand for shotgun-shell ammunition will be unaffected d. The supply of shotgun-shell ammunition will increase

(A) The demand for shotgun-shell ammunition will increase

When computing the opportunity cost of attending a basketball game you should include a. the price you pay for the ticket and the value of your time b. the price you pay for the ticket, but not the value of your time c. the value of your time, but not the price you pay for the ticket d. neither the price of the ticket nor the value of your time

(A) The price you pay for the ticket and the value of your time

An early frost in the vineyards of Napa Valley would cause a(n) a. increase in the demand for wine, increasing price b. increase in the supply of wine, decreasing price c. decrease int he demand for wine, decreasing price d. decrease in the supply of wine, increasing price

(A) increase in the demand for wine, increasing price

In markets, prices move toward equilibrium because of a. the actions of buyers and sellers b. government regulations placed on market participants c. increased competition among sellers d. buyer's ability to affect market outcomes

(A) the actions of buyers and sellers

If the supply of a product decreases, then we would expect equilibrium price a. to increase and equilibrium quantity to decrease b. to decrease and equilibrium quantity to increase c. and equilibrium quantity to both increase d. and equilibrium quantity to both decrease

(A) to increase and equilibrium quantity to decrease

The slope of a line that passes through the points (20, 30) and (40, 14) is a. -5/4 b. -4/5 c. 4/5 d. 5/4

(B) -4/5

During an economic downturn when consumer income falls, the demand for tacos increases and the demand for sushi decreases. This implies that tacos a. and sushi are complements b. are an inferior good and sushi is a normal good c. are an economic bad and sushi is an economic good d. are a normal good and sushi is an inferior good

(B) Are an inferior good and sushi is a normal good

Suppose you make jewelry. If the price of gold falls, then we would expect you to a. be willing and able to produce less jewelry than before at each possible price b. be willing and able to produce more jewelry than before at each possible price c. face a greater demand for your jewelry d. face a weaker demand for your jewelry

(B) Be willing and able to produce more jewelry than before at each possible price

A rational decision maker takes an action only if the a. marginal benefit is less than the marginal cost b. marginal benefit is greater than the marginal cost c. average benefit is greater than the average cost d. marginal benefit is greater than both the average cost and the marginal cost

(B) Marginal benefit is greater than the marginal cost

Years ago, thousands of country music fans risked their lives by rushing to buy tickets for a Willie Nelson concert at Carnegie Hall. This behavior indicates a. the ticket price was above the equilibrium price b. the ticket price was below the equilibrium price c. the ticket price was at the equilibrium price d. nothing about the equilibrium price

(B) The ticket price was above the equilibrium price

Suppose scientists provide evidence that people who drink energy drinks are more likely to have a heart attack than people who do not drink energy drinks. We would expect to see a. no change in the demand for energy drinks b. a decrease in the demand for energy drinks c. an increase in the demand for energy drinks d. a decrease in the supply of energy drinks

(B) a decrease in the demand for energy drinks

A relatively flat demand curve indicates that a. quanitty demanded will adjust only slightly to a price change b. quantity demanded will adjust significantly to a price change c. quantity demanded will not adjust to a price change d. the change in quantity demanded will exactly equal a change in price

(B) quantity demanded will adjust significantly to a price change

Which of the following is not held constant when looking at a demand curve for a good? a. income b. the price of the good c. tastes d. the prices of alternative goods

(B) the price of the good

Consider Noah's decision to go to college. If he goes to college, he will spend $80,000 on tuition, $15,000 on room and board, and $4,000 on books. If eh does not go to college, he will earn $22,000 working in a store and he will spend $13,000 on room and board. Noah's cost of going to college is a. $99,000 b. $103,000 c. $108,000 d. $121,000

(C) $108,000

Kari downloads 7 songs per month when the price is $1.29 per song and 10 songs per month when the price is $0.99 per song. Kari's behavior demonstrates the law of a. price b. supply c. demand d. income

(C) Demand

In building economic models, economists often omit a. assumptions b. theories c. details d. equations

(C) Details

Which of the following is a positive, as opposed to a normative, statement? a. The US department of Justice should allow a merger between AT&T and T-Mobile because it would have little effect on consumers. b. Antitrust laws should be used to prevent further concentration in the wireless telephone service market c. The US Department of Justice sued AT&T to block its merger with T-Mobile d. The wireless telephone service market is too highly concentrated

(C) The US Department of Justice sued AT&T to block its merger with T-Mobile

A surplus exists in a market if a. there is an excess demand for the good b. quantity demanded exceeds quantity supplied c. the current price is above its equilibrium price d. all of the above are correct

(C) The current price is above its equilibrium price

The freezing weather in California decreased the supply of oranges. This would increase the demand for apple juice, assuming apple juice is considered a. a normal good b. an inferior good c. a substitute for orange juice d. a compliment of orange juice

(C) a substitue for orange juice

The marginal benefit Susie gets from purchasing a third pair of gloves is a. the same as the total benefit she gets from purchasing three pairs of gloves b. more than the marginal cost of purchasing the third pair of gloves c. the total benefit she gets from purchasing three pairs of gloves minus the total benefit she gets from purchasing two pairs of gloves d. the total benefit she gets from purchasing four pairs of gloves minus the total benefit she gets from purchasing three pairs of gloves.

(C) the total benefit she gets from purchasing three pairs of gloves minus the total benefit she gets from purchasing two pairs of gloves

In the circular-flow diagram, which of the following is not a factor of production? a. labor b. land c. capital d. money

(D) Money

Which of the following firms is most likely to have market power? a. a grocery store in a metropolitan area b. a convenience store in a suburb c. a pub in a college town d. the only gasoline station in a rural area

(D) The only gasoline station in a rural area

Equilibrium is the condition that exists a. whenever there is no government intervention in the market b. when the demand curve intersects the price axis c. when the demand curve intersects the quantity axis d. when quantity demanded equals quantity supplied

(D) When quantity demanded equals quantity supplied

A decrease in supply is represented by a a. movement downward and to the left along a supply curve b. movement upward and to the right along a supply curve c. rightward shift of a supply curve d. leftward shift of a supply curve

(D) leftward of a supply curve

The two loops in the circular-flow diagram represent a. the flow of goods and the flow of services b. the flow of dollars and the flow of financial assets c. the flow of inputs into production processes and the flow of outputs from production processes d. the flows of inputs and outputs and the flow of dollars

(D) the flows of inputs and outputs and the flow of dollars

Which of the following events would cause a movement upward and to the right along the supply curve for mangos? a. the number of sellers of mangos increases b. there is an advance in technology that reduces the cost of producing manages c. the price of fertilizer decreases, and fertilizer is an input in the production of mangos d. the price of mangos rises

(D) the price of mangos rises

The study of how society manages its scarce resources

Economics