econ test 1
What one of the following is not a demand shifter
Input cost
The following table shows the demand schedule for a particular good. Using the midpoint method, what is the price elasticity of demand when price rises from $8 to $12
1
What is the tax burden on the sellers?
1
What is the tax burden on the buyers?
3
What is the amount of tax per unit?
4
When countries realize their comparative advantage and specialize in their advantage, the total production in the world will
Rise
Which of the following economy is under the centrally planned economy?
US Denmark North Korea (correct) Mexico
What factor decides between buyers and sellers who pay a bigger portion of the tax?
Whoever is more inelastic
which one of the following cause equilibrium quantity to rise?
demand and supply both increase
Consider Jerry's decision to go to college. If he goes to college, he will spend $15,000 on tuition, $12,000 on room and board, and $2,000 on books. If he does not go to college, he will earn $27,000 working in a store and spend $10,000 on room and board. Jerry's cost of going to college is
$29,000 $56,000 $46,000 (correct) $66,000
Consider Jason's decision to go to college. If he goes to college, he will spend $25,000 on tuition, $10,000 on room and board, and $3,000 on books. If he does not go to college, he will earn $22,000 working in a store and spend $9,000 on room and board. Jason's cost of going to college is
$38,000 $60,000 Correct Answer $51,000 $69,000
Rent control is an example of
Price ceiling
What is opportunity cost of an item?
Total dollar cost of purchase after tax. Total dollar cost of purchase before tax. What you must give up to get that item. (correct) The amount of time that associated with earning the income to buy the good.
Which demand curve represents the most elastic demand?
D1 most horizontal
What do points on the PPF represent?
Efficient
The term "invisible hand" refers to
Government Consumers Businesses Free market (correct)
In the circular-flow diagram, who buys the good and services?
Government Firms Households (correct) All of the above.
Economic activities in the market economy are guided by
Government Large corporations Central planners Price and self-interest (correct)
Demand is elastic if the price elasticity of demand is
Greater than 1
If tax is levied on sellers of the product, the supply curve will
Shift up
At price of $20, there is a
Shortage of 200 units
Which of the following would cause price to rise?
Shortage of the good
At price of $35, there is a
Surplus of 400 units
The opportunity cost of an item is
What you must give up to get that item.
If cross price elasticity is positive, these goods must be
Substitute good
For a good that is narrowly defined, demand
Tends to be elastic
What's the opportunity of corn in Argentina?
2/3 Fish
What is the opportunity cost moving rom point A to B?
20 dryers
Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. If both country decide to specialize in the good they have the comparative advantage in, what is the combine production between the two countries?
12 cheese and 8 bread
Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. What's the opportunity cost of Cheese in England
2/3 Bread
What is the opportunity cost to Footlocker of increasing the production of socks from 700 to 900?
200 shoes
What is the opportunity cost to Footlocker of increase the production of shoes from 400 to 800?
700 socks
If this economy spend all its resources producing dryers, how many dryers can it produce?
80 dryers
Refer to the figure, which arrow represents the flow of goods and services?
A B correct (firms to goods and services to households) C D
Which economist coined the term "invisible hand"
Benjamin Franklin David Ricardo Adam Smith (correct)
In a perfectly competitive market, who are called price-takers?
Both buyers and Sellers
A legal maximum price a good can be charged is called price
Ceiling
When deciding the direction of trade, economists must consider
Comparative advantage
Good A and Good B are complements. If the price of good A increases, then the
Demand for good B decreases
Suppose quantity demanded increases by 20%, price decrease by 10%, the price elasticity of demand for this good is
Elastic and equal to 2
Assume that England and Spain can switch between producing cheese and producing bread at a constant rate. Which of the following statement is correct?
England has the absolute advantage in both cheese and bread
Consider iPhone as a normal good, an increase in consumer income will lead to
Increase in the price and increase in the quantity for iPhone.
Another word for "factors of production" is
Inputs (correct) Outputs Goods Services
If income elasticity is positive, this good must be
Normal good
A government imposed price floor at $6, it's
Not binding, and nothing happens
The phrase "no such thing as a free lunch" means
Opportunity cost is increasing as more and more of the same good is consumed Consumers always respond to incentive Rational consumer use marginal analysis to make decision People face tradeoff for their decisions (correct)
In the circular-flow diagram, households
Own the factors of productions.
Which one of the following is not a supply shifter
Price of the good
Which point represent an impossible production combination?
Q (on y axis)
The price elasticity of demand measures how much
Quantity demanded changes due to a change in price