Econ Quiz Questions
which of the following would shift the supply curve for MP3 players to the right?
a decrease in the price of an input used to produce MP3 players
Imagine that the curves shown in the accompanying figure represent two demand curves for traditional wings (basket ofsix) at Buffalo Wild Wings. Further assume that wings are a normal good. Indicate which of the following could cause a movement from point A to C (leftward shift of the entire curve)
a fall in the number of buyers, a rise in vegetarianism
In a two−good, two country world, if one country has an absolute advantage in the production of both goods, it cannot benefit by trading with the other country
false
f additional units of a good could be produced at an increasing opportunity cost, the production possibilities frontier would be linear.
false
if the income elasticity for canned food is .8, then canned food is an inferior good
false
suppose that to increase sales of hybrid vehicles, auto manufacturers are offering large cash incentives. this is an example of a macroeconomics topic
false
the government makes all economic decisions in a mixed economy
false
which of the following best describes scarcity?
unlimited wants exceed the limited resources available
What do economists mean by the word "marginal"?
extra or additional
Suppose your expenses for this term are as follows: tuition: $10,000, room and board: $6,000, books and other educationalsupplies: $1,000. Further, during the term, you can only work part−time and earn $8,000 instead of your full−time salary of$20,000. What is the opportunity cost of going to college this term, assuming that your room and board expenses would be the same even if you did not go to college?
$23,000
which graph above best represents what happens in the market for hotel rooms at a ski resort during the winter? from the graph that you picked, if hotel rates stayed at their summer level, the result would be a _______ of hotel rooms
1) A, because more people would need accommodations, thereby shifting demand to the right ***increase demand - shift entire demand curve to the right 2) shortage
Economist X. M. Gao and two colleagues have estimated that the cross-price elasticity of demand between beer and wine is 0.31. If so, then beer and wine are ______. Gao and colleagues have estimated that the cross-price elasticity of demand between beer and spirits is 0.15. If the price of spirits increases by 10 percent, then the quantity of beer demanded will _____ by _____ percent. In addition, Gao and colleagues have estimated the income elasticity of demand for beer to be -.09. If so, then beer is ___
1) substitutes 2) increase, 1.5 3) an inferior good
An article in the New York Times about the New York Metropolitan Opera (the Met) suggests that the popularity of opera might be increased if the Met reduced its ticket prices. But the article observes that such ticket price cuts would only be possible if the Met received a gift from "a very deep-pocketed donor." The authors of the article are assuming a cut in ticket prices, and assuming there is no gift from a "very deep-pocketed donor," ____ increase the Met's revenue. The authors are assuming the price elasticity of demand for tickets to the Met is
1) will not 2) inelastic
the figure above shows the production possibilities frontiers for Tahiti and bora bora. each country produces two goods, milk and honey. what is the opportunity cost of producing one gallon of milk in bora bora?
1.5 gallons of honey linear graph with one point at 540 honey gallons and the other point at 360 milk gallons
microeconomics is the study of
how households and firms make choices
if the slope of a demand curve is equal if -.1 then
we don't know whether the demand is elastic or inelastic
Fred (pogo sticks = 24, unicycles = 8) Barney (pogo sticks = 28, unicycles = 14) the table above shows the output per month of two people, Fred and Barney. They can either devote their time to making pogo sticks or making unicycles. What is Barney's opportunity cost of making a pogo stick?
1/2 of a unicycle
The Coffee Nook, a small cafe near campus, sells cappuccinos for $2.50 and Russian tea cakes for $1.00 each. What is the opportunity cost of buying a cappuccino?
2.5 Russian tea cakes
At a recent faculty meeting, Lorraine Waverly, president of Skywalker College, announced that enrollment is up by 12 percent over the previous semester. If enrollment the previous semester was 3,250 students, what is the student enrollment this semester?
3640
Suppose the United States and Mexico both produce hamburgers and tacos. The combinations of the two goods that each country can produce in one day are presented in the table below. US (ham - 0, 70, 140, 210 --- tacos - 126, 84, 42, 0) Mexico (ham - 0, 14, 28, 42 --- tacos - 105, 70, 35, 0). Suppose the United States is currently producing 140 tons of hamburgers and 42 tons of tacos and Mexico is currently producing 28 tons of hamburgers and 35 tons of tacos. If the United States and Mexico each specialize in producing only one good (the good for which each has a comparative advantage), then a total of ____ additional tons of hamburgers can be produced for the two countries combined and a total of ____ additional tons of tacos can be produced
42, 28
Guatemala: one canoe (10 hrs), one sailboat (60 hrs) Honduras: one canoe (15 hrs), one sailboat (75 hrs) The table above shows the number of labor hours required to produce a canoe and a sailboat in Guatemala and Honduras. What is Guatemala's opportunity cost of producing one sailboat?
6 canoes
In your economics class, you scored a 68 on the first quiz, a 95 on the second quiz, and an 85 on the third quiz. Your average quiz grade is _______. On the fourth quiz, you scored an 88. Did the fourth quiz raise your average?
82.7, yes
The graph illustrates an initial competitive equilibrium in the market for apples at the intersection of D2 and S2 (point E). Which of the following changes would cause the equilibrium to change to point A?
A decrease in the wages of apple workers and an increase in the price of oranges, a substitute for apples.
as price falls from Pa to Pb, the quantity demanded increases the most along D1, therefore
D1 is more elastic than D2 or D3 ** D1 more horizontal then D2 and D3
an increase in population would be represented by a change from
D1 to D2 ** shift entire demand curve to the right
Consider the two demand curves illustrated in the figure to the right. Which of the two is relatively more elastic?
D2 is more elastic **more horizontally than D1
In the 1950s, the economist Bela Balassa compared 28 manufacturing industries in the United States and Britain. In every one of the 28 industries, Balassa found that the United States had an absolute advantageLOADING.... In these circumstances, would there have been any gain to the United States from importing any of these products from Britain? Explain.
Even with an absolute advantage, the United States would have benefited from importing those products for which Britain had a comparative advantage.
In 18th century Europe, governments gave guilds legal authority to limit production of goods. How did this authority either obstruct or improve the market mechanism?
It obstructed the market mechanism because the guild's actions prevented the forces of demand and supply from coordinating the self−interested decisions of producers and consumers.
Annie Lowery, a business reporter, wrote the book Give People Money: How a Universal Basic Income Would End Poverty, Revolutionize Work, and Remake the World, which advocates that the federal government adopt a universal basic income(UBI) under which every person in the country would receive a monthly check of $500 to $1,000. She argues that "in a society as rich as ours...everyone deserves a guarantee of financial security." Is Lowery correct that it is the role of the federal government to guarantee that people have financial security?
Lowery is making a normative judgment regarding the policy. Normative analysis concerns what one person believes ought to be. You can agree or disagree with her opinion depending on your own views of the issue. There is no way to demonstrate that Lowery's opinion is correct.
Suppose the United States and Mexico both produce hamburgers and tacos. The combinations of the two goods that each country can produce in one day are presented in the table below. US (ham - 0, 70, 140, 210 --- tacos - 126, 84, 42, 0) Mexico (ham - 0, 14, 28, 42 --- tacos - 105, 70, 35, 0). Which country has a comparative advantage in producing tacos?
Mexico
China: one digital camera (100 hrs), wheat (4 hrs) SK: one digital camera (60 hrs), wheat (3 hrs) the table above shows the number of labor hours required to produce a digital camera and a pound of wheat in china and South Korea. if the two countries specialize and trade, who should export digital cameras?
South Korea
The figure above shows the production possibilities frontiers for Tahiti and Bora Bora. Each country produces two goods, milk and honey. Which country has a comparative advantage in the production of milk?
Tahiti linear graph with one point at 480 honey gallons and the other at 400 milk gallons
Suppose the United States and Mexico both produce hamburgers and tacos. The combinations of the two goods that each country can produce in one day are presented in the table below. US (ham - 0, 70, 140, 210 --- tacos - 126, 84, 42, 0) Mexico (ham - 0, 14, 28, 42 --- tacos - 105, 70, 35, 0). Which country has an absolute advantage in producing tacos?
United States
Last year, the Pottery Palace supplied 8,000 ceramic pots at $40 each. This year, the company supplied the same quantity of ceramic pots at $55 each. Based on this evidence, The Pottery Palace has experienced
a decrease in supply
In an opinion column in the Wall Street Journal, economist Richard McKenzie of the University of California, Irvine wrote: "If countries import goods that can be made more cheaply abroad than at home, and produce goods that can be made more cheaply at home than abroad, then all trading nations will end up with more income and wealth than if they tried to produce everything themselves." Briefly explain his reasoning. When countries specialize in producing goods in which they have ___________ advantage and trade for goods in which other countries have __________ advantage, the incomes of all countries increase
a comparative, a comparative
which of the following would result in a higher absolute value of the price elasticity of demand for a product?
a wide variety of substitutes are available for the good
An article in the Wall Street Journal on the market for traditional canned tuna stated the following two facts: i. Firms selling traditional canned tuna are struggling to connect with millennial and generation Z consumers, "who favorfresher, less-processed options" in the food they eat. ii. Firms selling traditional canned tuna are facing competition from firms that offer tuna for sale in "pouches and kits with trendy flavors or as a healthy snack." a. From this information, can we conclude that falling sales of traditional cans of tuna is likely the result of a movement along the demand curve for traditional cans of tuna or a shift in the demand curve? The falling sales of traditional cans of tuna are the result of ____ b. Which would be better news for firms selling traditional canned tuna: Fact (i) is more important in explaining their declining sales than fact (ii), or the reverse?
a) a shift in the demand curve for tuna to the left b) firms would prefer fact (ii) more than fact (I) because it is easier for the traditional canned tuna producers to change their marketing strategy and also offer their tuna in pouches and trendy flavors than it is to change the minds of millennial and generation Z consumers about the desirability of eating tuna.
consider the following items: a) the novel "a gentleman in Moscow" by Amor Towles b) the "The Spirited Shipper", an innovative wine shipping box c) a swiss chef's award - winning recipe d) an original fabric design for example, the fabric used for coach bags and luggage Which of the items listed is an example of intellectual property?
all of the items listed
when production reflects consumer preferences, _______ occurs
allocative efficiency
Assume that cotton is a normal good. Which of the following would cause both the equilibrium price and equilibrium quantity of cotton to increase?
an increase in consumer income
If, in response to a decrease in the price of grapes, the quantity of grapes demanded increases, then economists would describe this as
an increase in quantity demanded
holding everything else constant, a decrease in the price of bicycles will result in
an increase in quantity of bicycles demanded
Which of the following events would create economic growth, that is, shift the production possibilities frontier outward?
an increase in the available labor, an increase in technology that affects the production of both goods, an increase in the available natural resources
Imagine that the curves shown in the accompanying figure represent two demand curves for traditional wings (basket ofsix) at Buffalo Wild Wings. Further assume that wings are a normal good. The movement from point A to B on D1 is caused by (just gets higher on the demand curve)
an increase in the price of baskets of traditional wings
which of the following would cause a decrease in the supply of milk?
an increase the price of a product that producers sell instead of milk
comparative advantage means the ability to produce a good or service
at a lower opportunity cost than any other producer
For each surfboard that Australia produces, it gives up the opportunity to make 25 boomerangs. New Zealand can produce 1 surfboard for every 15 boomerangs it produces. Which of the following is true about the comparative advantage between the twocountries?
australia has the comparative advantage in producing boomerangs
What are the key determinants of the price elasticity of demand for a product? The key determinants of the price elasticity of demand for a product are:
availability of close substitutes, passage of time, necessities versus luxuries, definition of the market, and share of the good in the consumer's budget
over what range of prices is the demand price elastic? price per pound (16, 14, 12, 10, 8, 6, 4, 2) quantity demanded fo cheese (3, 4, 5, 6, 7, 8, 9, 10)
between $12 and $16
increasing opportunity cost is represented by a _______ production possibilities frontier
bowed out
A Gallup public opinion poll indicates that among people aged 18 to 29, more have a favorable view of socialism than of capitalism. A columnist in the Wall Street Journal comments: "Would these people actually know socialism if they saw it? Taxing the rich, Medicare-for-all, and a Green New Deal that replaces fossil fuels with renewables are certainly liberal, probably radical, possibly unwise. But socialist? Hardly." What definition of socialism is the columnist using if he doesn't consider the programs he lists to be socialist? Is the columnist's definition of socialism one that U.S. socialists like Senator Bernie Sanders and Congresswoman Alexandria Ocasio-Cortez would be likely to accept? The columnist is likely defining socialism to refer to a
centrally planned economy in which the government directly controls most production. Bernie Sanders would be unlikely to accept this definition of socialism because he is more concerned with the provision of services such as health care and not government ownership of businesses.
economists refer to the necessity of holding all variables other than price constant in constructing a demand curve as the
ceteris paribus condition
economists assume that rational behavior is useful in explaining choices people make
even though people may not behave rationally all the time
scarcity is central to the study of economics because it implies that
every choice involves an opportunity cost
which of the following statements is true?
every individual, no matter how rich or poor, is faced with making trade-offs
"The distribution of income should be determined by the government" is an example of a positive economic statement
false
If Sanjaya can shuck more oysters in one hour than Tatiana, then Sanjaya has a comparative advantage in shucking oysters.
false
If the absolute value of the price elasticity of demand for gasoline is 0.5, then a 10 percent increase in the price of gasoline leads to a 0.5 percent decrease in the quantity demanded.
false
If you and your neighbor both grow oranges and grapefruits and you are better than your neighbor at picking both oranges andgrapefruits, there can be no advantage to you in specializing in growing only one type of fruit and trading with your neighbor for the other.
false
the paradox of American farming is
food has become cheaper and more abundant as the number of farms has decreased.
Of the following examples, which would likely be performed by an economist working for apple?
forecasting the demand for wearable technology that synchronizes with the iPhone, analyzing data related to a potential buyout of semiconductor manufacturer intel corp, using economic models to analyze the future of cell phone usage in the US
An iPad contains hundreds of parts that are designed, manufactured, and assembled by firms around the world. Using many different firms in the production of the iPad addresses which of the following fundamental economic questions?
how will the goods and services be produced?
which of the following is a positive economic statement?
if the price of iPhones falls, a larger quantity of iPhones will be purchased
the _____ effect refers to the change in quantity demanded for a good that results from the effect of a change in the good's price on consumers purchasing power
income
Suppose the cost of harvesting merino wool has risen at the same time as consumer preference for merino wool has risen. In the market for merino wool, this would result in the equilibrium price ________ and the equilibrium quantity ________.
increasing, increasing or decreasing
In recent years, a number of cities have enacted taxes on soda and other sweetened beverages. If the policy goal of these city governments is to raise tax revenue to fund important initiatives such as education programs, this would be most successful if the price elasticity of demand for these sweetened beverages is
inelastic
at a price of $5, the quantity sold
is 2 units demand and supply curve - just find where the price of $5 intersects the supply curve
Suppose the price elasticity of demand for canned soup is estimated at −1.62. What happens to sales revenue if the price of canned soup rises?
it falls
economists reason that the optimal decision is to continue any activity up to the point where the
marginal benefit equals the marginal cost
which of the following covers the study of topics such as inflation or unemployment?
macroeconomics
The ________ the sale of an additional unit of a product is a marginal benefit to the firm
revenue received from
Suppose a hat manufacturer currently sells 2,000 hats per week and makes a profit of $5,000 per week. The plant owner observes, "Although the last 300 hats we produced and sold increased our revenue by $1,000 and our costs by $1,100, we are still making an overall profit of $5,000 per week so I think we're on the right track. We are producing the optimal number of hats." Using marginal analysis terminology, another economic term for the incremental revenue received from the sale of the last 300 hats is
marginal revenue
in economics, the term _____ refers to a group of buyers and sellers of a product and the arrangement by which they come together to trade
market
efficiency means that goods are distributed in a way that ________, while equity means that goods are distributed in a way that _____
maximizes benefits to society, is fair
The demand for McDonald's hamburgers should be _______ the demand for all hamburgers
more elastic than
which of the following statements about normative analysis is correct?
normative analysis is concerned with what ought to be
the relationship between two variables is positive when ____, and the relationship between two variables is negative when _______
one variable increases and the other increases; one variable increases and the other decreases
Assume that the graphs in this figure represent the demand and supply curves for used clothing, an inferior good. Which panel describes what happens in this market as a result of a decrease in income?
panel C ** one supply curve, D1 and D2 - D2 is an entire line shift to the right
Assume that the graphs in this figure represent the demand and supply curves for Fruitopia, a soft drink. Which panel describes what happens in the market for Fruitopia when the price of Snapple, a substitute product, decreases?
panel D **one supply curve and D1 and D2 curves, but D2 in a shift to the left
when economists develop models designed to explain the choices people make, they generally assume that
people are rational
which of the following statements about positive analysis is correct?
positive analysis is concerned with what is
inelastic supply occurs whenever the elasticity of supply value is
positive and less than 1
a sportswriter writing about the Cleveland Indians baseball team made the following observation: "If the Indians suddenly slashed all tickets to $10, would their attendance actually increase? Not all that much and revenue would drop dramatically." The sportswriter is assuming that the demand for Indians tickets is
relatively price inelastic
economic decline (negative growth) is represented on a production possibilities frontier model by the production possibility frontier
shifting inward
which of the following statements about price elasticity of demand is true?
the elastic portion of a straight-line, downward-sloping demand curve corresponds to the segment above the midpoint
which determinant is the most important for price elasticity of demand?
the availability of close substitutes
Studies have shown links between calcium consumption and a reduction in osteoporosis. How does this affect the market forcalcium?
the calcium demand curve shifts to the right because of a change in tastes in favor of calcium
Suppose the California Nurses Union successfully secured a 12 percent increase in the wages of registered nurses. If a hospital responds by reducing the quantity of registered nurses hired and increasing the quantity of physician's assistants hired, what conclusion can you draw?
the cross price elasticity of demand between registered nurses and physicians assistants is positive
if the price of gasoline decreases, what will be the impact in the market for public transportations?
the demand curve for public transportation shifts to the left
Assume that when the price of cantaloupes is $2.50 the demand for cantaloupes is unit elastic, and that the demand curve for cantaloupes is linear and downward sloping. If firms lower the price of cantaloupes to $2.00 which of the following statements can be made regarding the price elasticity of demand for cantaloupes?
the demand for cantaloupes at $2 must be inelastic
Assume that the hourly price for the services of tarot card readers has risen and sales of these services have also risen. One can conclude that
the demand for tarot card readers has increased
Assume that an economist has estimated the price elasticity of demand values in the table above. Use the data in the table to select the correct statement. price elasticity of demand - coca cola = -3 - all carbonated soft drinks = -1.5 - all soft drinks = -.8
the difference in elasticity values is explained by the fact that the more narrowly we define a market the more elastic the demand will be
Suppose the demand for a product increases. What will be the effect on the market equilibrium price and quantity if supply is perfectly inelastic? If supply is perfectly inelastic, then
the equilibrium price will increase and the equilibrium quantity will not change
economists believe that an activity should be continued up to the point where
the marginal benefit from the activity is equal to the marginal cost
Suppose the equilibrium price and equilibrium quantity of gold both decrease. Which of the following would produce such achange?
the market demand curve for gold could have decreased
the cross price elasticity of demand measures the
the percentage change in the quantity demanded of one good divided by the percentage change in the price of another good
the attainable production points on a production possibility frontier are
the points on and inside the production possibility frontier
Which of the following explains why a firm would be interested in knowing the price elasticity of demand for a good itsells?
the price elasticity of demand allows the firm to calculate how changes in the price of the good will affect the firm's total revenue
According to a study of the U.S. demand for alcoholic beverages, the price elasticity of demand for beer is −0.30. Which of the following could explain why the price elasticity of demand for beer is low?
the price of beer is relatively low and for many people it is a habit forming product
The cross−price elasticity between Gillette razors and a related good is −3.4. What happens to the demand for the related good if the price of Gillette razors falls by 10 percent?
the quantity demanded of the related good rises by 34 percent
which of the following is evidence of a shortage of walnuts?
the quantity of walnuts demanded is greater than the quantity supplied
the income elasticity of demand measures
the responsiveness of quantity demanded to changes in income
if the quantity of walkie-talkies supplied increases by 5% when prices increases by 12% then
the supply of walkie-talkies is inelastic
Refer to the diagram to the right which shows the production possibilities frontier for Mendonca, an agrarian nation that produces two goods, meat and vegetables. The linear production possibilities frontier in the figure indicates that
the tradeoff between meat and vegetables is constant downward sloping linear curve
if the price is $15
there would be a shortage of 300 units **supply is less than demand curve at this point
In response to a surplus the market price of a good will fall; as the price falls, the quantity demanded will increase and quantity supplies will decrease until equilibrium is reached.
true
necessities tend to have more inelastic demand than luxuries
true
the sales revenue a seller receives from the sale of an additional unit of goods is called the marginal benefit
true
between points a and b on the demand curve, demand is
unit elastic **pt a ($8, 5000) pt b ($4, 10000) an actual curve (not linear)
the demand for a product is likely to be more elastic
when a product has more substitutes available
the distinction between a normal and an inferior good is
when income increases, demand for a normal good increases while demand for an inferior good falls