ECN 104 Final: ECN_104 crib sheet
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Considering the demand side of a market for a good, it is reasonable to expect that:
i. demand curves for a given good are identical between consumers
ii. demand curves for a given good differ between consumers
iii. an individual has identical demand curves for different goods
iv. an individual has different demand curves for different goods
i |
ii |
iii |
iv |
i and iii |
ii and iv |
Suppose the market demand curve for a good is represented by the linear equation Q = 60 - 0.75P. If the market price were to increase from P = $20 to P = $40, then holding all other factors constant:
the quantity demanded would decrease by 10 units and total expenditures on the good would decrease by $400 |
the quantity demanded would decrease by 15 units and total expenditures on the good would increase by $300 |
the quantity demanded would decrease by 30 units and total expenditures on the good would increase by $1200 |
the quantity demanded would increase by 20 units and total expenditures on the good would decrease by $800 |
the quantity demanded would increase by 10 units and total expenditures on the good would increase by $100 |
the quantity demanded would increase by 25 units and total expenditures on the good would increase by $1000 |
A perfectly competitive firms supply curve for a good identifies the:
i. minimum quantity supplied at each price, holding all other factors constant
ii. firms minimum willingness to accept for each incremental unit of the good (e.g., the first unit, second unit, etc.), holding all other factors constant
iii. maximum quantity supplied at each price, holding all other factors constant
iv. firms maximum willingness to accept for each incremental unit of the good (e.g., the first unit, second unit, etc.), holding all other factors constant
i and ii |
i and iv |
ii and iii |
iii and iv |
Considering the supply side of a market for a good, if a firms supply curve were vertical, then:
the law of supply holds, and quantity supplied is completely insensitive to changes in price |
the law of supply holds, and quantity supplied is highly sensitive to changes in price |
the law of supply fails to hold, and quantity supplied is completely insensitive to changes in price |
the law of supply fails to hold, and quantity supplied is highly sensitive to changes in price |
none of the above |
The determinants of supply are:
i. factors other than price that will affect the quantity of a good or service a firm is willing and able to purchase
ii. factors that affect a producers maximum willingness-to-accept to produce various quantities of a good
iii. factors that affect a producers minimum willingness-to-accept to produce various quantities of a good
i |
ii |
iii |
i and ii |
i and iii |
The market supply curve for a good is derived by:
i. horizontally summing the supply curves of the individual firms in the market
ii. vertically summing the supply curves of the individual firms in the market
iii. summing the quantity supplied by each firm at a given price and then repeating this over the range of prices
i |
ii |
iii |
i and ii |
i and iii |
If the level of technology used in the production of a good improves, and assuming the quality of the good does not change, then:
i. more output may be obtained with a given amount of inputs compared to before the technological improvement
ii. a given amount of output may be obtained with fewer inputs compared to before the technological improvement
iii. the firm will increase its use of other inputs, such as the number of workers it employs
iv. market demand for the good will increase
i |
ii |
iii |
iv |
i and ii |
i, ii, and iii |
i, ii, and iv |
i, ii, iii, and iv |
Considering the market for gasoline, which of the following would result in an increase in market supply?
i. a decrease in the price of gasoline
ii. an improvement in oil extraction and refining technologies
iii. an increase in the wage rates paid to gasoline refinery workers
iv. a decrease in the price of crude oil, a key input used to produce gasoline
v. the imposition of a federal gasoline tax aimed a decreasing the emission of greenhouse gases
i |
ii |
iii |
iv |
v |
ii and iv |
i, ii, and iv |
i, ii, iii, and iv |
i, ii, iii, iv and v |
Suppose a market has two identical sellers. If each sellers supply function is given by P = 20 + Q, then the market supply function is:
P = 20 + 0.5Q |
P = 20 + 2Q |
P = 40 + Q |
P = 40 + 2Q |
From the market framework discussed in class and the readings, it may be concluded that in order for a good to be exchanged between a seller and a buyer, it must be that:
buyer maximum willingness-to-pay is greater than seller minimum willingness-to-accept |
buyer maximum willingness-to-pay is greater than or equal to seller minimum willingness-to-accept |
buyer minimum willingness-to-pay is greater than or equal to seller maximum willingness-to-accept |
buyer minimum willingness-to-pay is greater than seller maximum willingness-to-accept |
If the market demand function is given by P = 80 - 0.3Q and the market supply is given by P = 20 + 0.1Q, then the equilibrium price and quantity are:
P = $35 and Q = 150 |
P = $65 and Q = 150 |
P = $26 and Q = 60 |
P = $28 and Q = 80 |
Of concern are the affects of sustained summer droughts on the domestic supply of wheat. Noting that wheat is a primary ingredient in the production of bread and that potatoes are a substitute for bread, if the supply of wheat declines then it is reasonable to expect:
the price of wheat to fall, the supply of bread to increase, and the demand for potatoes to increase |
the price of wheat to fall, the supply of bread to increase, and the demand for potatoes to decrease |
the price of wheat to rise, the supply of bread to decrease, and the demand for potatoes to decrease |
the price of wheat to rise, the supply of bread to decrease, and the demand for potatoes to increase |
the price of wheat to rise, the supply of bread to increase, and the demand for potatoes to increase |
the price of wheat to rise, the supply of bread to increase, and the demand for potatoes to decrease |
Suppose a perfectly competitive market is initially in equilibrium. If market demand and supply decrease simultaneously, then equilibrium:
price will rise, but the equilibrium quantity may either rise, fall, or remain unchanged |
quantity will rise, but the equilibrium price may either rise, fall, or remain unchanged |
price will fall, but the equilibrium quantity may either rise, fall, or remain unchanged |
quantity will fall, but the equilibrium price may either rise, fall, or remain unchanged |
Considering the demand side of a market for a good, the consumer surplus derived by an individual:
i. is the difference between the maximum amount the consumer is willing to pay on each unit and the minimum prices that producers are willing to accept
ii. is the difference between the minimum amount the consumer is willing to pay on each unit and the price he/she
actually pays
iii. is the difference between the maximum amount the consumer is willing to pay on each unit and the price he/she actually pays
iv. will decrease if price increases
i |
ii |
iii |
i and iv |
ii and iv |
iii and iv |
Suppose the market demand for a good is described by the equation P = 120 - 2Q. If a change in market supply results in price decreasing from P0 = $80 to P1 = $70, then the resulting change in consumer surplus is:
$225 |
$400 |
$575 |
$625 |
$750 |
QUESTION 1
Assume there are two basic goods produced in a nation, consumer goods and capital goods. The production possibilities graph for these two goods is bowed out from the origin. This reason for this shape of the graph is because of:
A. | the other-things-equal assumption. | |
B. | the law of increasing opportunity costs. | |
C. | diminishing marginal utility. | |
D. | present choices and future possibilities. |
1 points
QUESTION 2
From an economic perspective, when a student decides to attend another year of college, the student has concluded that the:
A. | marginal costs of attending college are reduced by the availability of grants and subsidies. | |
B. | marginal benefits of attending college have increased because the future is brighter. | |
C. | marginal benefits of attending college are greater than the marginal costs. | |
D. | marginal costs of attending college have decreased to make college affordable. |
1 points
QUESTION 3
A person observes that as consumer prices fall, economic growth increases. The person concludes that fall consumer prices leads to economic growth. This conclusion would be an example of:
A. | confusing correlation with causation. | |
B. | the fallacy of composition. | |
C. | trade-offs among economic goals. | |
D. | the other-things-equal assumption. |
1 points
QUESTION 4
The problem of unlimited wants and limited income is known as
A. | the scientific method. | |
B. | unequal wealth distribution. | |
C. | normative economics. | |
D. | the economizing problem. |
1 points
QUESTION 5
A point outside the production possibilities curve is:
A. | unattainable without economic growth. | |
B. | attainable and the economy is efficient. | |
C. | unattainable without inflation. | |
D. | attainable, but the economy is inefficient. |
1 points
QUESTION 6
Which one of the following would be an example of loaded terminology?
A. | market forces | |
B. | tentative hypothesis | |
C. | entrepreneurial functions | |
D. | creeping socialism |
1 points
QUESTION 7
Suppose there are two economies, Alpha and Beta, both of which have the same production possibilities curves. If Beta devotes more resources to produce investment goods than consumer goods as compared to Alpha, then in the future:
A. | Alpha will not be able to achieve full employment. | |
B. | Beta will not be able to achieve full employment. | |
C. | Alpha will experience greater economic growth than Beta. | |
D. | Beta will experience greater economic growth than Alpha. |
1 points
QUESTION 8
Macroeconomics, as opposed to microeconomics, is concerned with
A. | individual businesses. | |
B. | new computer technology. | |
C. | the stock market. | |
D. | the economy as a whole. |
1 points
QUESTION 9
Which one of the following is an example of a positive economic statement?
A. | The size of the Federal government should be reduced. | |
B. | Midwest states affected by drought should be given more federal disaster aid. | |
C. | Education and income are highly correlated. | |
D. | The minimum wage for workers should be raised to help low-income workers. |
1 points
QUESTION 10
Economics is primarily concerned with
A. | interactions between the government and market participants. | |
B. | how scarce resources are used. | |
C. | the production and distribution of capital goods. | |
D. | how income is divided among individuals. |
1 points
QUESTION 11
The production possibilities table below shows the hypothetical relationship between the production of guns (national defense) and butter (social goods) in an economy.
A B C D E
Guns 0 4 7 9 10
Butter 4 3 2 1 0
If the economy is producing at alternative C, what is the opportunity cost of producing another unit of butter?
A. | 3 units of guns. | |
B. | 1 units of guns. | |
C. | 2 units of guns. | |
D. | 4 units of guns. |
1 points
QUESTION 12
Assume that a consumer can buy only two goods X and Y, and has an income of $120. The price of X is $10 and the price of Y is $20. If the consumer spends all of her money on X and Y, which of the following would be a possible combination:
A. | 4X and 2Y | |
B. | 5X and 3Y | |
C. | 6X and 3Y | |
D. | 8X and 1Y |
1 points
QUESTION 13
In the production possibilities model of an economy, when there is full employment of resources
a nation will be operating at an interior point within its production possibilities curve. | ||
a nation will be operating on the production possibilities curve. | ||
the production possibilities curve will shift outward to the right. | ||
the production possibilies curve will shift inward to the left. |
1 points
QUESTION 14
In economics the concept that there is "no free lunch" means
A. | scarce resources were used to produce these "free" goods so there is an opportunity cost to producing them. | |
B. | consumers are irrational when they ask for a free lunch unless they can make the case that the free lunch benefits business. | |
C. | the marginal cost of the "lunch" is greater than the marginal benefit. | |
D. | businesses could not make a profit if they gave away free goods to consumers. |
1 points
QUESTION 15
Assume that a consumer can only purchase two goods with her income. A straight-line budget constraint indicates that the opportunity cost of obtaining an additional unit of one good is:
A. | negative. | |
B. | constant. | |
C. | increasing. | |
D. | decreasing. |