Econ exam 1 review quiz

If a decrease in income leads to a decrease in the demand for mac and cheese, then mac and cheese is a complement. a normal good. a neutral good. a necessity.

a normal good

If society decides it wants more of one good and all resources are fully utilized, then additional resource supplies will have to be found. it has to give up some of another good and incur some opportunity costs. it is unable to do this unless technology advances. more unemployment will occur.

it has to give up some of another good and incur some opportunity costs.

Suppose Tinsel Town Videos lowers the price of its movie club membership by 10 percent and as a result, CineArts Videos experienced a 16 percent decline in its movie club membership. What is the value of the cross- price elasticity between the two movie club memberships? -1.6 -0.625 0.625 1.6

1.6

Which of the following factors is expected to cause the demand curve for coffee to shift to the right? A fall in the manufacturing cost of coffee A higher tax on the sale of tea, a substitute for coffee An increase in the supply of coffee due to better weather A higher personal tax on the income of all consumers

A higher tax on the sale of tea, a substitute for coffee

What is the difference between an "increase in supply" and an "increase in quantity supplied"? There is no difference between the two terms; they both refer to a shift of the supply curve. There is no difference between the two terms; they both refer to a movement along a given supply curve. An "increase in supply" means the supply curve has shifted to the right while an "increase in quantity supplied" refers to a movement along a given supply curve in response to an increase in price. An "increase in supply" means the supply curve has shifted to the right while an "increase in quantity supplied" means at any given price supply has increased.

An "increase in supply" means the supply curve has shifted to the right while an "increase in quantity supplied" refers to a movement along a given supply curve in response to an increase in price.

When trying to assess your economic well-being you should: Compare your situation to that of most of the people alive today. Compare yourself to Bill Gates. Compare yourself to your neighbors. Compare yourself to your parents. Not compare yourself to others because that is foolish.

Compare your situation to that of most of the people alive today.

Which of the following statements is true? Every individual, no matter how rich or poor, is faced with situations that require trade-offs. Economics is a social science that studies the trade-offs we are forced to make because resources are unlimited. Trade-offs do not apply when the consumers purchase a product for which there is excess supply, such as with a stock clearance sale. Any time you have to decide which action to take you are experiencing economic equity.

Every individual, no matter how rich or poor, is faced with situations that require trade-offs.

Which of the following is TRUE? For an inferior good, when income increases, the demand curve shifts leftward. The demand curve for a good shifts leftward when the price of a substitute rises. If consumers expect the price of a good will rise in the future, the demand curve shifts leftward. An increase in population shifts the demand curve for most goods leftward.

For an inferior good, when income increases, the demand curve shifts leftward.

In referring to economic growth, when we refer to "Capital" we do not mean which of the following: Infrastructure. Kyle Field. Money in bank accounts. Factories. All of the above

Money in bank accounts

Which of the following statements is TRUE? No economic model captures every detail that affects a problem. Economic models always make accurate predictions about behaviors. Economic models must fully reflect reality. Economic models use economists' opinions with no use of data.

No economic model captures every detail that affects a problem.

Assembly lines are an example of: Process innovation All of these Product innovation Capital investment

Process innovation

________ occurs when the direction of cause and effect is mixed up in a study. Adverse causality Limited information bias Omitted variable bias Reverse causality

Reverse causality

Which of the following is a positive economic statement? Foreign workers should not be allowed to work for lower wages than the citizens of a country. People should not buy SUVs. The government should mandate electric automobiles. Scarcity necessitates that people make trade-offs.

Scarcity necessitates that people make trade-offs.

What is the difference between static efficiency and dynamic efficiency? Static efficiency refers to efficiency in the presence of impediments, or static, while dynamic efficiency has to do with efficiency when there is energy. Static efficiency refers to efficiency in the presence of impediments, or static, while dynamic efficiency refers to efficiency over time. Static efficiency refers to efficiency at a point in time, while dynamic efficiency refers to efficiency when there is energy. Static efficiency refers to efficiency at a point in time, while dynamic efficiency refers to efficiency over time.

Static efficiency refers to efficiency at a point in time, while dynamic efficiency refers to efficiency over time.

Suppose at the going wage rate of $20 per hour, firms can hire as many hours of janitorial services as they desire. If any firm tries to lower the wage rate to $19, it will not be able to hire any janitor. What does this indicate about the supply curve for janitorial services? Supply is relatively inelastic. Supply is unit-elastic. Supply is perfectly elastic. Supply is perfectly inelastic.

Supply is perfectly elastic

Which of the following statements is true? Models help economists to explain the past, but do not help in predicting the future. The scientific method used by economists is based on idealism and not empiricism. Models that economists use are perfect replicas of reality. Testing with data enables economists to distinguish between good models and bad models.

Testing with data enables economists to distinguish between good models and bad models.

Auctions in recent years have resulted in higher prices paid for letters written by John Wilkes Booth than those written by Abraham Lincoln. Which of the following events would cause the price differences in these letters to get smaller? The demand for Booth letters increases. The supply of Lincoln letters increases. The demand for Lincoln letters decreases and the demand for Booth letters increases. The demand for Lincoln letters increases and the supply of Booth letters increases.

The demand for Lincoln letters increases and the supply of Booth letters increases.

Auctions in recent years have resulted in higher prices paid for letters written by John Wilkes Booth than those written by Abraham Lincoln. What is a reason for this difference in price? There are more letters available for collectors to buy that were written by Lincoln than there are letters that were written by Booth. Many people are more fascinated by villains and anti-heroes than by heroic figures. Booth was a well-known actor; the demand for his letters rose as wealthy actors attempted to buy them. There is a surplus of letters written by Booth and a shortage of letters written by Lincoln.

There are more letters available for collectors to buy that were written by Lincoln than there are letters that were written by Booth.

Which of the following statements is CORRECT? When both demand and supply decrease, the quantity decreases and the price might rise, fall, or remain the same. When both demand and supply increase, the quantity decreases and the price might rise, fall, or remain the same. When both demand and supply increase, the price rises and the quantity might increase, decrease, or remain the same. When both demand and supply decrease, the quantity increases and the price might rise, fall, or remain the same.

When both demand and supply decrease, the quantity decreases and the price might rise, fall, or remain the same.

Economists assume that individuals are rational and respond to incentives. will never take actions to help others. behave in unpredictable ways. prefer to live in a society that values fairness above all else.

are rational and respond to incentives.

Demand for a luxury item, such as a yacht, is likely to be income elastic and price inelastic. both income inelastic and price inelastic. income inelastic and price elastic. both income elastic and price elastic.

both income elastic and price elastic.

If quantity of milk is measured on the horizontal axis and quantity of juice is measured on the vertical axis, a decrease in the price of milk will cause the budget constraint to: pivot rightward (pivot out) along the vertical axis. shift to the right. shift to the left. pivot rightward (pivot out) along the horizontal axis.

pivot rightward (pivot out) along the horizontal axis.

The quantity demanded of a good is: the amount of a good that sellers are willing to supply at a given market price. the amount of a good that buyers are willing to purchase at a given market price. always determined by government intervention. determined independent of the market price.

the amount of a good that buyers are willing to purchase at a given market price.

A change in all of the following variables will change the market demand for a product except income. tastes. the price of the product. population and demographics.

the price of the product.

A decrease in the price of eggs from $1.50 to $1.30 per dozen resulted in an increase in egg purchases in two cities. In Philadelphia, daily egg purchases increased from 6000 to 8000 dozens; in nearby Dover, Delaware, daily egg purchases increased from 300 to 400 dozens. The price elasticity of demand is therefore greater in the smaller city as would be expected. certainly affected by population differences in different markets. lower in the smaller city as would be expected. the same in Philadelphia as in Dover.

the same in Philadelphia as in Dover

Normative economic analysis involves purely descriptive statements. testable hypotheses by scientists. true statements of facts only. value judgments and opinions.

value judgments and opinions.

If the demand for a product is perfectly inelastic, a decrease in the price of the product will decrease total revenue. will increase total revenue. will not change total revenue. any of the above are possible.

will decrease total revenue.