Midterm
Washington D.C.'s metro train system is being extended further into the neighboring states of Maryland and Virginia, thereby reducing the cost of commuting into the United States' capitol. Other things being held constant, this can be expected to:
increase the extent of the market for housing around Washington D.C.
Which of the following is a positive statement?
A fundamental assumption of the economic theory of consumer behavior is that consumers always prefer having more of any good to having less of it.
Assume that food is measured on the horizontal axis and clothing on the vertical axis. If the price of food falls relative to that of clothing, the budget line will:
A) become flatter.
Refer to the indifference curve in the figure above. Which of the following statements is correct?
B) This individual receives no satisfaction from Good B.
Suppose the nominal price of gasoline was $0.90 per gallon in 1987. To convert this value to the real price of 1987 gasoline in 2012 dollars, we should:
B) multiply by the 2012 CPI and divide by the 1987 CPI.
Although there are many reasons why a market can be non-competitive, the principal economic difference between a competitive and a non-competitive market is:
B) the extent to which any firm can influence the price of the product.
Sue views hot dogs and hot dog buns as perfect complements in her consumption, and the corners of her indifference curves follow the 45-degree line. Suppose the price of hot dogs is $5 per package (8 hot dogs), the price of buns is $3 per package (8 hot dog buns), and Sue's budget is $48 per month. What is her optimal choice under this scenario?
C) 6 packages of hot dogs and 6 packages of buns
Use the following two statements to answer this question: I. If utility is ordinal, a market basket that provides 30 utils provides twice the satisfaction of a market basket that provides 15 utils. II. When economists first studied utility it was believed that utility was cardinal, but it was later discovered that ordinal preferences are sufficient to explain how most individual decisions are made.
C) I is false, and II is true.
An upward sloping indifference curve defined over two goods violates which of the following assumptions from the theory of consumer behavior?
C) more is preferred to less.
Suppose the price of crude oil is $95 per barrel in New York and $85 per barrel in Texas, and the transaction costs for trading between the two markets are $15 per barrel. What actions should you take to arbitrage this price difference?
D) Do not buy or sell oil in either market
Use the following statements to answer this question: I. If the extent of a market is broader, it is less likely that firms in the market can influence the market price. II. In determining whether two different products belong to the same market, it is necessary to know whether the two products can be used as substitutes for each other.
D) I and II are both true.
____questions have to do with explanation and prediction, ________ questions have to do with what ought to be.
D) Positive; normative.
Which of the following is true about the indifference curves of two goods that are perfect complements?
D) They are shaped like right angles.
4) Which of the following are examples of perfectly competitive markets?
E) all of the above
1. Economics is about the allocation of scarce resources. Which of the following is NOT an example of economic scarcity?
If General Motors increases its production of SUVs this year, it will have to spend more on advertising.
macroeconomics
affects everyone in the economy (ex: employment, min wage)
microeconomic
focuses on certain industry (ex: car industry) doesnt effect entire economy
substitute in consumption
effects damand side of market
MRS : slope of:
indifference curve
consumer preference
more > less
elastic
more responsive to price change