Exam 1 - Part 1 Question
Refer to Figure 2. In this market, equilibrium price and quantity, respectively, are a. $10 and 50 units. b. $10 and 70 units. c. $10 and 30 units. d. None of the above (Link: https://docs.google.com/document/d/1R7u5Um_zX1ZrnZFON5KTta4ipunTZdFvuxfNwym8p1M/edit?usp=sharing)
a
Refer to Google Doc Figure 1. Efficient production is represented by which point(s)? a. A, B b. A, B, C, F, G c. C, F, G d. None of the above is correct. (Link: https://docs.google.com/document/d/1R7u5Um_zX1ZrnZFON5KTta4ipunTZdFvuxfNwym8p1M/edit?usp=sharing)
a
New oak tables are normal goods. What would happen to the equilibrium price and quantity in the market for oak tables if the price of maple tables (a substitute) rises, the price of oak wood rises, more buyers enter the market for oak tables, and the price of the glue used in the production of the new oak tables increased? a. Quantity will fall, and the effect on price is ambiguous. b. Price will rise, and the effect on quantity is ambiguous. c. Price will fall, and the effect on quantity is ambiguous. d. None of the above is correct.
b
Production possibilities frontiers are usually bowed outward. This is because a. the more resources a society uses to produce one good, the fewer resources it has available to produce another good. b. resources are specialized; that is, some are better at producing particular good rather than other goods. c. it reflects the fact that the opportunity cost of producing a good decreases as more and more of that good is produced.
b
Refer to Google Docs Figure 3. 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 change in consumer preferences toward watching movies in movie theaters rather than at home c. an expectation by buyers that their incomes will increase in the very near future d. a decrease in the price of DVD players
b
Suppose the market demand for medium cheese pizza from Papa Murphy's is Qd=20-(1/2)P, and the market supply is Qs= -2+(1/2)P. The equilibrium price (Pe) and the equilibrium quantity (Qe) of pizas bought and sold per month are a. Pe = $18, Qe = 11 b. Pe = $22, Qe = 9 c. Pe = $9, Qe = 22 d. None of the above is correct.
b
Which of the following is an example of a normative, as opposed to positive, statement? a. The federal government obtains much of its revenue from income taxes. b. Income taxes should be reduced. c. If the government were to set a maximum legal price on gasoline, then there would be a shortage of gasoline. d. The price of gasoline came down sharply during the second half of 2006.
b
Refer to Google Doc Figure 1. This economy has the ability to produce at which point(s)? a. A, B, D b. A, B, C, F, G c. A, B d. None of the above is correct. (Link: https://docs.google.com/document/d/1R7u5Um_zX1ZrnZFON5KTta4ipunTZdFvuxfNwym8p1M/edit?usp=sharing)
b or c
Holland grows flowers and makes ceramic vases. China also grows flowers and makes ceramic vases, but China is better at producing both goods. In this case, trade could a. benefits neither China nor Holland. b. benefits Holland, but not China. c. benefits both Holland and China. d. benefits China, but not Holland.
c
Refer to Google Doc Table 1. Which combination would produce a decrease in equilibrium price and an indeterminate change in equilibrium quantity? a. A b. B c. C d. D (Link: https://docs.google.com/document/d/1R7u5Um_zX1ZrnZFON5KTta4ipunTZdFvuxfNwym8p1M/edit?usp=sharing)
c
Refer to Google Doc Table 2. If the production possibilities frontier is bowed outward, then "?" could be a. 200. b. 275. c. 180. d. All of the above are possible (Link: https://docs.google.com/document/d/1R7u5Um_zX1ZrnZFON5KTta4ipunTZdFvuxfNwym8p1M/edit?usp=sharing)
c
Senator Bright, who understands economic principles, is trying to convince workers in her district that trade is beneficial. Senator Bright should argue that trade can be beneficial a. in only a limited number of circumstances because others are typically self-interested. b. to us if we can gain and the others involved in the trade lose. c. because it allows specialization, which increases total output. d. only if it allows us to obtain things that we couldn't make for ourselves.
c
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. for an economy to consume more of one good, it must stop consuming the other good entirely c. 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 d. for an economy to produce and consume goods, it must sacrifice environmental quality
c
Which of these statements best represents the law of demand? a. When buyers' tastes for a good increase, they purchase more of the good. b. When buyers' demands for a good increase, the price of the good increases. c. When the price of a good decreases, buyers purchase more of the good. d. When income levels increase, buyers purchase more of most goods
c
On a bowed production possibilities frontier, as you move down along the curve a. more of one good must be given up to receive one unit of the other good. b. the opportunity cost increase. c. the available production technology does not change. d. All of the above are correct.
d
Refer to Google Doc Table 1. Which combination would produce a decrease in equilibrium quantity and an indeterminate change in equilibrium price? a. A b. B c. C d. D (Link: https://docs.google.com/document/d/1R7u5Um_zX1ZrnZFON5KTta4ipunTZdFvuxfNwym8p1M/edit?usp=sharing)
d
Refer to Google Doc to Figure 2. If there is currently a shortage of 20 units of the good, then the law of a. supply and demand predicts that the price will fall by $2 to eliminate the shortage. b. supply predicts that the price will rise by $2 to eliminate the shortage c. demand predicts that the price will rise by $2 to eliminate the shortage. d. supply and demand predicts that the price will rise by $2 to eliminate the shortage (Link: https://docs.google.com/document/d/1R7u5Um_zX1ZrnZFON5KTta4ipunTZdFvuxfNwym8p1M/edit?usp=sharing)
d
Which of the following products would be considered scare? a. automobiles b. baseballs autographed by Babe Ruth c. pickles d. All of the above are correct.
d
Which of the following statements is an example of a positive, as opposed to normative, statement? a. Economic policies should focus on improving equality. b. Americans deserve a cleaner environment. c. All Americans are entitled to quality health care. d. Reducing emissions reduces days missed from school due to asthma.
d
