Microeconomics Final Exam
Demand refers to
The goods and services buyers are willing and able to purchase at various prices in a given period of time
Which point in the graph is consistent with a recession? (See graph)
a
Subsidies on domestically produced sport utility vehicles cause a(n) _________ in the supply of ________ sport utility vehicles
increase; domestic
The MOST common way in which economists model a problem is by
Simplifying the model down to its basic relevant elements
The state of Florida is experiencing a drought that has caused the price of water that farmers used to grow oranges to rise. This will cause a decrease in the
Supply of oranges
Another name for a market economy is
The Price System
In a market based economy, scarce resources are allocated by
The Price System
Which situation deals more with equity than efficiency
The Red Sox sign a star player for $35 million a year, which is more than 10 times the average salary of the rest of the team
If bagels and donuts are substitute goods, then which scenario is likely to occur if the price of bagels is reduced?
The demand curve for donuts will shift to the left
Given the production possibilities schedule shown in the table, what is the opportunity cost of moving from E to F? Bananas Apples E 12 2 F 9 4 G 5 6 H 0 8
3 Bananas
The opportunity cost of producing a unit of pork is _____ unit(s) of corn. (See Graph on Quiz 2)
5
At an amusement park, Sue achieves an enjoyment value of 10 on her first roller coaster ride and an enjoyment value of 6 on her second ride. Her marginal benefit from her second ride is
6
Which item is most likely an inferior good?
A city bus ticket
Which policy is MOST likely to contribute to improved standards of living over time?
Adding after-school art and music programs to promote creativity
If a pizza parlor uses an oven in its production process, the oven is an example of which factor of production?
Capital
If cream cheese and bagels are complements, then an increase in the price of cream cheese will __________ the demand for bagels.
Decrease
Which headline would be least likely to be studied in macroeconomics?
GM Expands Car Sales in China
Willingness to pay is the
Highest value that a consumer believes a good or service is worth
Students who never miss class and study hard generally earn higher grades than those who do not. This is an example of:
Incentives
The market-clearing price
Is the price at which quantity demanded equals quantity supplied
A leather company produces shoes and belts. What will the company do if it expects the price of shoes to rise in the near future?
It will move resources from belt production to shoe production, thereby decreasing the supply of belts.
A laissez-faire approach to the question "How to produce?" would be found in a _____ economy.
Market
According to the law of demand, a decrease in the price of train travel will
Result in higher quantity of trips on trains
An INCREASE in technology
Shifts the production possibilities frontier curve OUTWARD.
Which question would be considered a normative question?
Should obstacle races be regulated to ensure the safety of participants?
The law of supply states that if prices _______ the market
fall, producers will offer fewer product to
Institutions that bring buys and sellers together so they can interact and transact with each other are called
markets
If the price of shoes is $60 per pair, the _______ will be 30 pairs of shoes
quantity supplied
Electricity is essential in the production of aluminum. If electricity price increases
the supply curve for aluminum shifts leftward
(Figure: Production Possibilities) Which statement is NOT correct regarding point X?
Because it is on the line, the combination at point X has no opportunity cost
Ch. 3
Ch. 3
In the demand curve shown, an increase in price from $1 to $2 will
Cause quantity demanded to fall from 30 to 20 units
Ch. 2
Ch. 2
Assuming everything else stays the same, an increase in the price of the laptop computers will _______ of laptop computers
Decrease the quality demanded
In which market is government most likely to intervene to prevent a market failure?
Market for college education
Which is NOT a determinant of supply?
National Income
There is a(n) _____ relationship between price and quantity demanded
Negative
Which enterprise is NOT an example of a market?
Painting one's own house
On a demand curve
Price - VERTICAL AXIS Quantity Demanded - HORIZONTAL AXIS
Every point on a production possibilities frontier (PPF) represents _____ efficiency.
Production
When an economy uses the most efficient means of farming to grow as much corn as possible, this economy has achieved
Production efficiency but not necessarily allocative efficiency
If the price of shoes is $60/pair, the _____ will be 10 pairs of shoes.
Quantity demanded
The Supply Curve
Shows a positive relationship between price and quantity supplied
Assume that imitation gemstones (an inferior good) are a low-cost alternative to diamonds (a normal good). What happens when average incomes increase?
The demand for diamonds increases, and the demand for imitation gemstones decreases
If knitting needles are a complementary good for yarn, what happens in the market for yarn when the price of knitting needles decreases?
The demand for yarn increases, and the equilibrium quantity increases
Tim woke up this morning with a stomachache and decided to skip class in order to get more rest. What is the opportunity cost of Tim's decision to sleep in?
The value of attending the class he decided to miss
A point to the right of the production possibilities frontier is
Unattainable
If an economy is operating at a point that is inside of its production possibilities frontier, then it can be assumed that its resources are
Underutilized