Macroeconomics Final Exam

*TABLE What is the equilibrium quantity in this market? a. 160 units b. 200 units c. 250 units d. 70 units

a. 160 units

Which of the following items is an inferior good? a. Discount stores b. Airline tickets c. Car rentals d. Luxury SUVs

a. Discount stores

*4 GRAPHS In 2011, Japan suffered a major earthquake and tsunami. Honda parts that were sourced from Japan could no longer be produced, which caused Honda to cut its production of cars. Which graph shows the effect of this shortfall? a. Graph C b. Graph A c. Graph D d. Graph B

a. Graph C

*4 GRAPHS A major technological advancement occurs in transportation technology, which leads to faster and more efficient train systems. Which graph depicts the effect on the supply of train rides? a. Graph D b. Graph C c. Graph B d. Graph A

a. Graph D

*4 GRAPHS If companies frequently start using drones to deliver products, which graph shows the effect this will have on the market for drones. ​a. Graph D b. Graph B c. Graph C d. Graph A

a. Graph D

Which principle tells you that the true cost of something is the next best alternative you have to give up to get it? a. The opportunity cost principle b. The marginal principle c. The interdependence principle d. The cost-benefit principle.

a. The opportunity cost principle

When quantity demanded exceeds quantity supplied, _____ exists. a. a shortage b. a surplus c. fixed demand d. equilibrium

a. a shortage

A market is a- a. setting that brings together potential buyers and sellers. b. set of demand curves for a product. c. set of supply curves for a product. d. a place where governments decide what is sold.

a. setting that brings together potential buyers and sellers.

What is quantity supplied? a. It is the amount of an item that a buyer is willing to buy at a particular price. b. It is the amount of an item that a seller is willing to sell at a particular price. c. It is a graph that plots how much a seller produces at different points in time. d. It is a graph that plots the quantities of an item that a seller plans to sell at different prices.

b. It is the amount of an item that a seller is willing to sell at a particular price.

Due to a decline in demand and popularity, Ford Motor Company is planning to phase out traditional sedans such as 'Fusion' and 'Taurus' to focus on SUVs and trucks. Ford's sedans and trucks/SUVs are- a. products that do not follow the law of supply. b. substitutes-in-production. c. inputs in production. d. complements-in-production.

b. substitutes-in-production.

The law of demand refers to- a. the positive relationship between price and quantity supplied. b. the inverse relationship between price and quantity demanded. c. the positive relationship between price and quantity demanded. d. the inverse relationship between price and quantity supplied.

b. the inverse relationship between price and quantity demanded.

As part of a market research project, you survey six random people to see how much gas per week they would buy at various prices. The data you collect is in the accompanying table. What is the total demand for gasoline at $2.50 per gallon in your survey? *TABLE a. 77 gallons b. 51 gallons c. 38 gallons d. 22 gallons

b. 51

*4 GRAPHS You are studying the demand for Minute Maid and Tropicana orange juice. Minute Maid improves the taste of its juice and people start preferring Minute Maid over Tropicana. Which graph depicts the impact of these changes on both Minute Maid and Tropicana? a. Graph A shows what happens in the market for Minute Maid, and Graph D shows what happens in the market for Tropicana. b. Graph A shows what happens in the market for Minute Maid, and Graph B shows what happens in the market for Tropicana. c. Graph B shows what happens in the market for Minute Maid, and Graph D shows what happens in the market for Tropicana. d. Graph B shows what happens in the market for Minute Maid, and Graph A shows what happens in the market for Tropicana.

b. Graph A shows what happens in the market for Minute Maid, and Graph B shows what happens in the market for Tropicana.

(missed on exam) What happens to the equilibrium price and quantity when demand increases and simultaneously supply decreases, and the relative size of the shifts is not known? a. The equilibrium quantity falls, and the change in the equilibrium price is ambiguous. b. The equilibrium price falls, and the change in the equilibrium quantity is ambiguous. c. The equilibrium quantity rises, and the change in the equilibrium price is ambiguous. d. The equilibrium price rises, and the change in the equilibrium quantity is ambiguous.

b. The equilibrium price falls, and the change in the equilibrium quantity is ambiguous.

The __________ suggests, decisions about quantities are best made incrementally. a. interdependence principle b. marginal principle c. opportunity cost principle d. cost-benefit principle

b. marginal principle

When faced with a quantity decision, the economic surplus is always maximized by following the- a. framing effect. b. Rational Rule. c. interdependence principle. d. opportunity cost principle.

b. rational rule

*GRAPH In the graph, the movement from point E to point F represents- a. an increase in quantity supplied. b. a decrease in supply. c. a decrease in quantity supplied. d. an increase in supply.

c. a decrease in quantity supplied.

*GRAPH In the graph, the movement from point M to point Q represents: a. a decrease in demand. b. a decrease in quantity demanded. c. an increase in demand. d. an increase in quantity demanded.

c. an increase in demand.

(Figure: Mia's Demand Curve for Ice Cream) The accompanying graph shows Mia's demand curve for ice cream, how many cones would Mia be willing to buy at $5 per cone? *GRAPH a. 12 cones b. 5 cones c. 3 cones d. 9 cones

c. 3

*4 GRAPHS Which graph shows what will happen in the market for luxury vehicles if a recession is imminent? a. Graph B b. Graph C c. Graph A d. Graph D

c. Graph A

*4 GRAPHS Dell and Apple are competitors in the computer market. Which graph illustrates the effect of a rise in the price of Dell computers on the demand for Apple computers? a. Graph A b. Graph C c. Graph D d. Graph B

c. Graph D

You go to Starbucks and see that the price of your favorite tall vanilla latte has gone up by 25 cents. All sizes of the vanilla lattes are now more expensive. As a result of this price increase, you would expect to see a- a. rise in the demand for vanilla lattes. b. rise in the quantity demanded of vanilla lattes. c. fall in the quantity demanded of vanilla lattes. d. fall in the demand for vanilla lattes.

c. fall in the quantity demanded of vanilla lattes.

The principle that your best choice depends on your other choices, the choices others make, developments in other markets, and expectations about the future is known as the _____ principle. a. marginal b. cost-benefit c. interdependence d. opportunity cost

c. interdependence

Diminishing marginal benefit: a. is not important in determining a consumer's purchase decision. b. is when buying an additional item yields a larger marginal benefit than the previous item. c. is when buying an additional item yields a smaller marginal benefit than the previous item. d. is when consumers do not follow the rational rule.

c. is when buying an additional item yields a smaller marginal benefit than the previous item.

Holding all else constant, if people eat out more at expensive restaurants when they earn more, then expensive restaurant meals are- a. goods with a network-effect. b. inferior goods. c. normal goods. d. goods with a congestion-effect.

c. normal goods

An equilibrium price is a price where the a. quantity demanded no longer changes. b. demand curve is identical to the supply curve. c. quantity supplied equals the quantity demanded. d. amount that buyers are willing to buy is equal to the amount that buyers are able to buy.

c. quantity supplied equals the quantity demanded.

If the price of jet fuel rises, the- a. supply of airline flights increases. b. supply of jet fuel decreases. c. quantity supplied of jet fuel increases. d. supply of jet fuel increases.

c. quantity supplied of jet fuel increases

*TABLE At what price does this market experience a shortage of 100 units? a. $50 b. $60 c. $30 d. $40

d. $40

*4 GRAPHS A coffee shop opens next to an existing coffee shop. Which of the following graphs shows the effect of this new coffee shop on the market supply curve for coffee in this area? a. Graph C b. Graph B c. Graph D d. Graph A

d. Graph A

The price of coffee at a local coffee shop is $3. Cheryl is willing to pay $6 for her first cup of coffee each day. The marginal benefit to her of each additional cup of coffee falls by $2. How many cups of coffee should Cheryl purchase? a. One b. Four c. Three d. Two

d. Two

*GRAPH The movement from point M to point N represents: a. a decrease in quantity demanded. b. a decrease in demand. c. an increase in demand. d. an increase in quantity demanded.

d. an increase in quantity demanded.

Sunk costs are costs that- a. are potential costs associated with a particular decision b. should be considered in any decision c. are part of the opportunity costs of a decision d. are incurred in the past and cannot be reversed.

d. are incurred in the past and cannot be reversed

The cost-benefit principle states that a decision should be pursued only if the- a. benefits are positive b. costs are greater than the benefits c. costs are negative d. benefits are greater than the costs

d. benefits are greater than the costs

(missed on exam) Shifts in demand- a. always lead to increases in equilibrium price. b. always lead to increases in equilibrium quantity. c. lead to price and quantity to move in the same direction. d. lead to price and quantity to move in opposite directions.

d. lead to price and quantity to move in opposite directions.

The law of supply refers to- a. the inverse relationship between price and quantity supplied b. the inverse relationship between price and quantity demanded. c. the positive relationship between price and quantity demanded. d. the positive relationship between price and quantity supplied.

d. the positive relationship between price and quantity supplied.