Midterm 1 Econ Exam

24) Which of the following will definitely occur when there is an increase in the supply of and decrease in demand for MP3 players? A) a decrease in equilibrium price B) an increase in equilibrium price C) an increase in equilibrium quantity D) a decrease in equilibrium quantity

A) a decrease in equilibrium price

19) In response to news reports that taking aspirin daily can reduce an individual's risk of a heart attack, there will most likely be a(n) A) increase in the demand for aspirin. B) increase in the quantity demanded of aspirin. C) decrease in the supply of aspirin. D) increase in the supply of aspirin.

A) increase in the demand for aspirin.

22) In response to news reports that drinking a glass of red wine each day can reduce an individual's risk of heart disease, there will most likely be a(n) A) increase in the demand for red wine. B) increase in the supply of red wine. C) decrease in the supply of red wine. D) increase in the quantity demanded of red wine.

A) increase in the demand for red wine.

3) Which of the following is not one of the three fundamental concepts of economics? A) profit maximization B) the working of efficient markets C) opportunity cost D) marginalism

A) profit maximization

17) According to the law of demand, as prices rise, ceteris paribus A) quantity demanded decreases. B) quantity demanded increases. C) demand decreases. D) demand increases.

A) quantity demanded decreases.

9) According to the theory of comparative advantage, ________ raise(s) productivity by lowering opportunity costs. A) trade and specialization B) investment in capital goods C) exchange and consumption D) economic growth

A) trade and specialization

5) Which of the following is a microeconomics question? A) Should Congress and the president take action to reduce global warming? B) Is it sensible for a government to subsidize tobacco production? C) Should the government attempt to influence the interest rate to lower inflation? D) Why do some countries grow faster than others?

B) Is it sensible for a government to subsidize tobacco production?

13) Economic growth may occur when A) technology remains unchanged but unemployment increases. B) a society acquires new resources. C) the society begins to produce the combination of goods society wants most. D) a society decides to produce less using existing resources.

B) a society acquires new resources.

4) The government should extend the duration of unemployment benefits to those workers who lost their jobs due to outsourcing. This statement is best described as A) an example of the fallacy of composition. B) a positive statement. C) a normative statement. D) an example of marginalism.

C) a normative statement.

23) The price of circuit boards used in the manufacturing of LCD televisions has fallen. This will lead to ________ LCD televisions. A) a decrease in the quantity supplied of B) an increase in the quantity supplied of C) an increase in the supply of D) a decrease in the supply of

C) an increase in the supply of

15) Among the factors of production are A) income. B) wages. C) capital. D) all of the above

C) capital

14) Consumers purchase products in ________ markets. A) factor B) input C) output D) resource

C) output

6) The process by which resources are transformed into useful forms is A) consumption. B) allocation. C) production. D) capitalization.

C) production.

12) The concept of trade-offs would become irrelevant if A) capital were eliminated. B) poverty were eliminated. C) scarcity were eliminated. D) we were dealing with a very simple, one-person economy.

C) scarcity were eliminated.

11) If an economy begins to use its resources less efficiently, it will move A) to a point closer to its ppf. B) from a point along its ppf to a point outside its ppf. C) to a point farther away from its ppf. D) from one point to another point along its ppf.

C) to a point farther away from its ppf.

8) Which of the following does not constitute an act of "investment" as economists use the term? A) A department store increases its inventory of football jerseys before the Super Bowl. B) The city council authorizes the construction of a new fire station. C) An accountant attends a seminar on changes in the federal tax code. D) A retiree buys 50 shares of stock at $10 a share and then sells the stock at a profit for $20 a share.

D) A retiree buys 50 shares of stock at $10 a share and then sells the stock at a profit for $20 a share.

21) The price of hard drives used in the manufacturing of laptop computers has risen. This will lead to ________ laptop computers. A) an increase in the quantity supplied of B) a decrease in the quantity supplied of C) an increase in the supply of D) a decrease in the supply of

D) a decrease in the supply of

16) Which of the following will cause a shift in the demand curve for hoverboards? A) a change in taste or preference B) a change in income C) a change in wealth D) all of the above

D) all of the above

20) When the increase in the price of one good causes the demand for another good to decrease, the goods are A) inferior. B) normal. C) substitutes. D) complements.

D) complements.

25) If increases in government regulations have increased the cost of producing gasoline-powered lawnmowers, you accurately predict that in the market for gasoline-powered lawnmowers, there will be a(n) A) increase in the supply of gasoline-powered lawnmowers, an increase in the price, and a decrease in the demand. B) decrease in the supply of gasoline-powered lawnmowers, an increase in the price, and a decrease in the demand. C) decrease in the quantity supplied of gasoline-powered lawnmowers, a reduction in the price, and an increase in the quantity demanded. D) decrease in the supply of gasoline-powered lawnmowers, an increase in the price, and a decrease in the quantity demanded.

D) decrease in the supply of gasoline-powered lawnmowers, an increase in the price, and a decrease in the quantity demanded.

1) The study of economics A) is concerned with proving that capitalism is better than socialism. B) is a very narrow endeavor. C) focuses on how a business should function. D) is a way of analyzing decision-making processes caused by scarcity.

D) is a way of analyzing decision-making processes caused by scarcity.

2) Studying how Joshua allocates his time between school and video games is an example of A) macroeconomics. B) industrial organization. C) descriptive economics. D) microeconomics.

D) microeconomics.

27) Excess demand results in a surplus.

FALSE

30) If the supply and demand for a product both increase at the same time, the equilibrium price and equilibrium quantity of the product will both increase, ceteris paribus.

FALSE

26) If coffee and tea are substitutes, then an increase in the price of coffee will result in an increase in the demand for tea.

TRUE

28) If price is below the equilibrium, then quantity supplied will be less than quantity demanded putting upward pressure on price.

TRUE

29) If price is below the equilibrium, there will be excess demand for the product.

TRUE

31) Most firms exist to make a profit.

TRUE