Micro Practice Test Ch. 1, 2, 4, 5, 6 (Aplia)

Table 6-2 Price Quantity Demanded Quantity Supplied $0 375 0 $5 300 50 $10 225 100 $15 150 150 $20 75 200 $25 0 250 Refer to Table 6-2. A price floor set at $20 results in

75 units sold.

http://sjc.cengagenow.com/ilrn/books/mank07t/mank07t.34.237.1.png Refer to Figure 5-7. For prices below $5, demand is price

inelastic, and raising price will increase total revenue.

When it comes to people's tastes, economists generally believe that

tastes are based on historical and psychological forces that are beyond the realm of economics.

Suppose the Federal Reserve announces that it will be making a change to a key interest rate to increase the money supply. This is likely because

the Federal Reserve is worried about unemployment

The production possibilities frontier is a graph that shows the various combinations of output that an economy can possibly produce given the available factors of production and

the available production technology

http://sjc.cengagenow.com/ilrn/books/mank07t/mank07t.08.115.1.png Refer to Figure 2-2. Boxes C and D of this circular-flow diagram represent

the markets for goods and services and the markets for factors of production

http://sjc.cengagenow.com/ilrn/books/mank07t/mank07t.42.099.1.png Refer to Figure 6-22. Suppose the same supply and demand curves apply, and a tax of the same amount per unit as shown here is imposed. Now, however, the buyers of the good, rather than the sellers, are required to pay the tax to the government. After the buyers pay the tax, relative to the case depicted in the figure, the burden on buyers will be

the same, and the burden on sellers will be the same

You have just been hired as a business consultant to determine what pricing policy would be appropriate to increase the total revenue of a bakery. The first step you would take would be to

determine the price elasticity of demand for the bakery's products

Economists regard events from the past as

interesting and valuable, since those events are capable of helping us to understand the past, the present, and the future

In conducting their research, economists often substitute historical events and historical episodes for

laboratory experiments.

http://sjc.cengagenow.com/ilrn/books/mank07t/mank07t.42.098.1.png Refer to Figure 6-22. Sellers pay how much of the tax per unit?

$0.50

Suppose that when the price of good X falls from $10 to $8, the quantity demanded of good Y rises from 20 units to 25 units. Using the midpoint method, the cross-price elasticity of demand is

-1.0, and X and Y are complements.

Which of the following could be the cross-price elasticity of demand for two goods that are complements?

-1.3

http://sjc.cengagenow.com/ilrn/books/mank07t/mank07t.13.054.1.png Refer to Figure 2-18. The slope of the line containing points Y and Z is

-2

Which of the following steps does an economist take when studying the economy?

-collect data -devise theories -analyze data *All of the above are correct.

A rationale for government involvement in a market economy is

-property rights have to be enforced. -markets sometimes fail to produce a fair distribution of economic well-being. -markets sometimes fail to produce an efficient allocation of resources. * All answers are correct

Suppose the price elasticity of supply for minivans is 0.3 in the short run and 1.2 in the long run. If an increase in the demand for minivans causes the price of minivans to increase by 5%, then the quantity supplied of minivans will increase by about

1.5% in the short run and 6% in the long run.

http://sjc.cengagenow.com/ilrn/books/mank07t/mank07t.08.192.1.png Refer to Figure 2-6. The opportunity cost of this economy moving from point I to point F is

120 pillows

Last year, Tess bought 5 handbags when her income was $54,000. This year, her income is $60,000, and she purchased 7 handbags. Holding other factors constant, it follows that Tess's income elasticity of demand is about

3.17, and Tess regards handbags as normal goods.

http://sjc.cengagenow.com/ilrn/books/mank07t/mank07t.34.248.1.png Refer to Figure 5-10. Total revenue when the price is P2 is represented by the area(s)

A+B

http://sjc.cengagenow.com/ilrn/books/mank07t/mank07t.36.065.1.png Refer to Figure 5-15. Along which of these segments of the supply curve is supply most elastic?

AB

A rational decisionmaker takes an action if and only if the marginal cost exceeds the marginal benefit.

False

Buyers and sellers always share the burden of a tax equally.

False

Inflation measures the increase in the quantity of goods and services produced from each hour of a worker's time.

False

Market failure is the ability of a single person to have a substantial influence on market prices.

False

Which of the following statements is valid when the market supply curve is vertical?

Market quantity supplied does not change when the price changes.

Which of the following is the most likely explanation for the imposition of a price floor on the market for corn?

Sellers of corn, recognizing that the price floor is good for them, have pressured policymakers into imposing the price floor.

For a particular good, a 5 percent increase in price causes a 2 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

The market for the good is broadly defined.

Which of the following events would cause a movement downward and to the left along the supply curve for mangos?

The price of mangos falls.

Suppose the cost of flying a 100-seat plane for an airline is $50,000 and there are 10 empty seats on a flight. The marginal cost of flying a passenger is

This cannot be determined from the information given

Choosing not to attend a concert so that you can study for your exam is an example of a tradeoff.

True

Which of the following statements is correct?

Who actually pays a tax depends on the price elasticities of supply and demand.

Table 4-12 A country club usually only allows members to purchase tickets for its celebrity golf tournament, but the club is considering allowing non-members to purchase tickets this year. The demand and supply schedules are as follows: Price Quantity Demanded by Members Quantity Demanded by Non-members Quantity Supplied $10 1000 500 600 $15 800 400 600 $20 600 300 600 $25 400 200 600 $30 200 100 600 Refer to Table 4-12. If both members and non-members are allowed to purchase tickets to this year's celebrity golf tournament and the country club sets the ticket price at $30, then there will be

a surplus of 300 tickets.

http://sjc.cengagenow.com/ilrn/books/mank07t/mank07t.08.207.1.png Refer to Figure 2-8. To reach point L, the economy would have to

acquire more resources or experience a technological advance.

Productivity is defined as the

amount of goods and services produced from each unit of labor input

http://sjc.cengagenow.com/ilrn/books/mank07t/mank07t.27.030.1.png Refer to Figure 4-11. The movement from point A to point B on the graph represents

an increase in the price of the good that is being supplied and the suppliers' responses to that price change.

College-age athletes who drop out of college to play professional sports

are well aware that their opportunity cost of attending college is very high.

http://sjc.cengagenow.com/ilrn/books/mank07t/mank07t.41.138.1.png Refer to Figure 6-14. If the horizontal line on the graph represents a price ceiling, then the price ceiling is

binding and creates a shortage of 40 units of the good.

http://sjc.cengagenow.com/ilrn/books/mank07t/mank07t.42.189.1.png Refer to Figure 6-29. Suppose D1 represents the demand curve for paperback novels, D2 represents the demand curve for gasoline, and S1 represents the supply curve for paperback novels and gasoline. After the imposition of the $2 on paperback novels and on gasoline, the

buyers of gasoline bear a higher burden of the $2 tax than buyers of paperback novels.

Minimum-wage laws are precise policy instruments that can specifically target workers whose family incomes are low.

false

While the scientific method is applicable to studying natural sciences, it is not applicable to studying a nation's economy.

false

In a market economy, who makes the decisions that guide most economic activity?

firms and households

In the circular-flow diagram,

income paid to the factors of production flows from firms to households.

The production possibilities frontier provides an illustration of the principle that

people face trade-offs

A direct or positive relationship exists between a country's

productivity and its standard of living.

Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling, the

quantity demanded of physicals increases, and the quantity supplied of physicals decreases.

An increase in quantity supplied

results in a movement upward and to the right along a fixed supply curve.

http://sjc.cengagenow.com/ilrn/books/mank07t/mank07t.13.066.1.png Refer to Figure 2-20. The graph above is a

scatterplot

If, at the current price, there is a surplus of a good, then

sellers are producing more than buyers wish to buy.

An example of a perfectly competitive market would be the

soybean market

When a supply curve is relatively flat, the

supply is relatively elastic.

Suppose chocolate-dipped strawberries are currently selling for $30 per dozen, but the equilibrium price of chocolate-dipped strawberries is $20 per dozen. We would expect a

surplus to exist and the market price of chocolate-dipped strawberries to decrease

A price ceiling set below the equilibrium price is binding.

true

An increase in the price of a substitute good will shift the demand curve for a good to the right.

true

At the equilibrium price, quantity demanded is equal to quantity supplied.

true

Cocoa and marshmallows are complements, so a decrease in the price of cocoa will cause an increase in the demand for marshmallows.

true

If the cross-price elasticity of demand for two goods is negative, then the two goods are complements.

true

Most markets in the economy are highly competitive.

true

Whether a tax is levied on sellers or buyers, buyers and sellers usually share the burden of taxes.

true

Suppose the Federal Reserve announces that it will be making a change to a key interest rate to decrease the money supply. This is likely because the Federal Reserve is

worried about inflation.