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ECON 2030 : Test 1 Version A

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azuremammoth471
15 Mar 2019
School
LSU
Department
Economics
Course
ECON 2030
Professor
All

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Test 1 version a: the more a good is perceived as a _______, everything else held constant, the more price inelastic demand will be for it. The ______ the portion of a consumer"s budget a good makes up, everything else held constant, the more price elastic demand will be for it: luxury, smaller, luxury, larger, necessity, smaller, necessity larger. Suppose john and yoko can spend their days picking peaches or making cream. Their productivity at each activity is the following. The cross price elasticity of demand for turnips and leeks will be ______ zero: greater than, equal to, less than. Suppose that oranges and apples are substitutes in consumption and that apples are the main input in the production of apple juice. Suppose further that the price of oranges increases: in the above situation, the equilibrium quantity of apply juice transacted will. Helen gilet in concert or buy s ticket to see robin yukiko.

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Related Questions

1. In economics, the demand for a good refers to the amount of the good that people:
a. Will buy at alternative income levels
b. Need to achieve a minimum standard of living.
c. Will buy at various prices
d. Would like to have if the good were free
2. The term ceteris paribus means that:
a. What is for the individual is not necessarily true for the whole
b. All variables except those specified are constant
c. Everything is variable
d. No one knows which variables will change and which will remain constant.
3. When economist talk about supply, they are referring to a relationship between price received for each unit sold and the ____________________.
a. Quantity supplied
b. Demand schedule
c. Demand curve
d. Market price
4. But nearly all supply curves share a basic similarity: they slop______________.
a. Up from left to right
b. Down from left to right
c. Up from right to left
d. Down from right to left
5. The nature of demand indicates that as the price of a good increases:
a. Suppliers wish to sell less of it.
b. Buyers desire to purchase less of it
c. More of it is desired
d. More of it is produced
6. Any given demand or supply curve is based on the certeris paribus assumption that _______.
a. Everything is variable
b. All else is held equal
c. No one knows which variables will change and which will remain constant
d. What is true for the individual is not necessary true for the whole.
7. Economist refer to the relationship that a higher price leads to lower quantity demand as the ______________.
a. Price model
b. Law of demand
c. Market equilibrium
d. Income gap
8. A perfect elastic supply curve is:
a. Vertical
b. Downward sloping to the left
c. Horizontal
d. Upward sloping to the right
9. A 10 percent increase in the price of soda leads to a 20 percent increase in the quantity of iced tea demanded. It appears that:
a. Elasticity of demand for iced tea is 2 and is elastic
b. Cross-price elasticity of demand for iced tea is -2
c. Cross-price elasticity of demand for soda is -0.5
d. Elasticity of demand for soda 0.5 AND IS INELASTIC
10. ___________ is the change in what is on the horizontal axis (quantity) divided by the change in what is the vertical axis (price).
a. Elasticity
b. Supply
c. Demand
d. Revenue
11. A severe freeze has once again damaged the Florida orange crop. The impact on the market for orange juice will be a leftward shift of:
a. The supply curve and the rightward shift of the demand curve resulting in a higher equilibrium price
b. Both the supply and demand curves
c. The supply curve
d. The demand curve, as consumers try to economize because the shortage.
12. Got the answer.
13. A drought decreases the supply of agricultural products, which means that at any given price a lower quantity will be supplied; conversely, especially good weather would shift the _____________.
a. Demand curve to the right
b. Supply curve to the left
c. Supply curve to the right
d. Demand curve to the left
14. Interpret the following statements:

The opportunity cost of one more slice of pizza in terms of sodas is the

   

the total number of pizza slices that we have divided by the total number of sodas that we have.
   

the number of sodas we have to give up to get one extra pizza slice.
   

the number of pizza slices we have to give up to get one extra soda.
   

the total number of sodas that we have divided by the total number of pizza slices that we have.

1 point

QUESTION 2

A production possibilities frontier shows

   

how money can be allocated among two kinds of goods.
   

the limits to the future growth of a nation.
   

the various combinations of output a nation can produce at a certain time, given its available resources and technology.
   

that if the price of one good decreases, the price of the other has to increase.

1 point

QUESTION 3

When a production possibilities frontier is bowed outward, as more of one good is produced, its opportunity cost

   

remains constant.
   

might increase, decrease, or remain constant depending on how much people value the additional units of the good.
   

increases.
   

decreases.

1 point

QUESTION 4

When all of the available factors of production are being efficiently employed, the

   

the economy is producing at a point within its PPF.
   

PPF disappears.
   

the economy is producing at a point beyond its PPF.
   

the economy is producing at a point on its PPF.

1 point

QUESTION 5

If a nation devotes a larger share of its current production to consumer goods, then

   

its PPF will shift inward.
   

its economic growth will slow down.
   

its PPF will shift outward.
   

some productive factors will become unemployed.

1 point

QUESTION 6

A point on the production possibilities frontier reflects an

   

the attainable point with full employment of all resources.
   

attainable point without full employment of all resources.
   

unattainable point without full employment of all resources.
   

the unattainable point with full employment of all resources.

1 point

QUESTION 7

When drawing a production possibilities frontier, which of the following is held constant?

   

the available factors of production and the state of technology
   

the amount of money in the economy
   

the prices of goods and services
   

the quantity of the goods and services that are produced

1 point

QUESTION 8

As we move along the production possibilities frontier,

   

more of both goods can be produced.
   

the possibilities of tradeoffs diminish.
   

a tradeoff is not possible because nations need all goods.
   

the production of one good increases as the production of the other good decreases.

1 point

QUESTION 9

Which of the following is an assumption used when drawing a production possibilities frontier?

i.Human wants and desires are limited to what is available.

ii. Only two goods are considered.

iii. The level of technology is fixed and unchanging.

   

I and iii
   

ii only
   

I, ii, and iii
   

I only

1 point

QUESTION 10

To achieve gains from trade, a country

   

needs to have an absolute advantage in the production of all goods.
   

specializes in producing a good in which it has a lower opportunity cost.
   

must produce at a point beyond its PPF.
   

should produce at the midpoint of its PPF.

1 point

QUESTION 11

Relative to Al, Joe has ________ if Joe can produce a good at a lower opportunity cost than Al.

   

a comparative advantage
   

more production efficiency
   

a marginal benefit
   

a comparative benefit

1 point

QUESTION 12

Does economic growth depend upon which of the following?

i.Improving the quality of labor

ii. Technological advancement

iii. Increasing the amount of capital

   

iii only
   

ii only
   

I only
   

I, ii, and iii

1 point

QUESTION 13

In one hour John can produce 20 loaves of bread or 18 cakes. In one hour Phyllis can produce 30 loaves of bread or 15 cakes. Which of the following statements is true?

   

John has a comparative advantage in producing cakes.
   

Phyllis has an absolute advantage in both goods.
   

Phyllis has a comparative advantage in producing cakes.
   

John has an absolute advantage in both goods.

1 point

QUESTION 14

As an economy produces more of one of the goods on a bowed out production possibilities frontier, what happens to the opportunity cost of producing the good?

   

It decreases.
   

It might increase, decrease, or remain constant depending on how much people value the additional units of the good.
   

It remains constant.
   

It increases.

1 point

QUESTION 15

The production possibilities frontier illustrates the

   

goods and services that people want.
   

maximum combinations of goods and services that can be produced.
   

resources the economy possesses, but not it is the level of technology.
   

limits to people's wants.

1 point

QUESTION 16

The United States produced approximately ________ worth of goods and services in 2007.

   

$14 billion
   

$14 trillion
   

$140 billion
   

$140 trillion

1 point

QUESTION 17

The fact of increasing opportunity cost when moving on the PPF means that

   

to increase the production of one product requires smaller and smaller sacrifices of the other good.
   

to decrease the production of one product requires smaller and smaller sacrifices of the other good.
   

to increase the production of one product requires larger and larger sacrifices of the other good.
   

when the government forces a movement from one point on the PPF to another point, no production is lost.

1 point

QUESTION 18

Other things equal, if India devotes more resources to educate its population than China,

   

China will grow faster than India.
   

India will be able to eliminate scarcity faster than China.
   

India will be able to eliminate opportunity cost faster than China.
   

India will grow faster than China.

1 point

QUESTION 19

For Ireland to grow more potatoes, wool production must decrease. This situation is an example of

   

zero opportunity cost.
   

producing at a point that lies beyond the PPF.
   

opportunity benefit.
   

a tradeoff.

1 point

QUESTION 20

Moving from one point to another on a production possibilities frontier implies

   

increasing the production of both goods.
   

increasing the production of one good and decreasing the production of another.
   

holding the production levels of both goods constant.
   

decreasing the production of both goods.

1 point

QUESTION 21

The United States is one of the richest nations in the world,

   

but it can still benefit from specialization and trade.
   

so does not need to trade with poor nations to achieve any gains from trade.
   

so might not have a comparative advantage in producing any goods.
   

so it must have a comparative advantage in the production of all goods.

1 point

QUESTION 22

"Comparative advantage" is defined as a situation in which one person can produce

   

more of all goods than another person.
   

a good for a lower opportunity cost than another person.
   

a good for a lower dollar cost than another person.
   

more of a good than another person.

1 point

QUESTION 23

The idea of increasing opportunity cost is reflected in the

   

the linear shape of the production possibilities frontier.
   

bowed in the shape of the production possibilities frontier.
   

bowed out the shape of the production possibilities frontier.
   

the positive slope of the production possibilities frontier.

1 point

QUESTION 24

Suppose that after specializing according to comparative advantage, a country is trading with another nation that also specializes according to its comparative advantage. Which of the following statements are true for the first country?

i)It enjoys gains from trade.

ii)It must have an absolute advantage in the production of the good it produces.

iii)It is producing at a point beyond its PPF.

   

I only.
   

I and ii.
   

I and iii.
   

ii and iii.

1 point

QUESTION 25

If society moves from a period of time with significant unemployment to a time with full employment, its production possibilities frontier will

   

shift rightward.
   

not shift because the society moves from one point on the frontier to a point inside the frontier.
   

not shift because the society moves from a point inside the frontier to a point on the frontier.
   

shift leftward.

1 point

Question 1 If it was impossible to have a comparative advantage, there would be no gains from trade. True False 4 points

Question 2 If the price of Good X is $10 and price of Good Y is $15, the slope of the budget constraint is 1.5. True False 4 points

Question 3 If the demand and supply curves have equal slopes in absolute value, the burden of a commodity tax will be split equally regardless of on whom the tax is placed. True False 4 points

Question 4 Suppose that supply is fixed at 100 units and demand is Q = 500 P. A price ceiling of $100 creates a shortage of 400 units. True False 4 points

Question 5 Housing shortages caused by rent controls are larger in the long run because the supply of housing is more elastic in the long run. True False 4 points

Question 6 Firms should exit the industry if average costs are greater than marginal costs. True False 4 points

Question 7 If a 3.67 percent increase in price causes a 1.97 percent decrease in quantity demanded, then total revenue must fall following an increase in price. True False 4 points

Question 8 Which of the following choices best illustrates the concept of Adam Smith's invisible hand ? A Vietnamese farmer grows rice; an exporter ships it to the United States, and a grocer in New York sells it to a customer. A fishery's stock of fish becomes depleted due to overfishing as boats from around the world converge. A government regulates a firm to clean up the pollutants it has released as part of its production process. An apartment building is built, which provides much needed housing, on the site of the only playground for children in that town. 4 points

Question 9 Figure: Labor Supply and Welfare Refer to the figure. The budget constraint is: ABC. BD. ABDC. ABD. 4 points Question 10 The price of coffee has increased, yet evidence suggests the demand for coffee has been stable. A possible explanation is that: there has been no change in the supply of coffee. there has been increased use of subsidies in coffee production. wages of workers in coffee production might have decreased. wages of workers in coffee production might have increased. 4 points Question 11 Which of the following statements is TRUE regarding profit maximization in competitive markets? I. When all firms pursue profits, none of them achieve profits. II. When all firms pursue profits, only the most innovative will achieve profits. III. Production is divided in such a way that total costs of production are minimized. I only II only I and III only II and III only 4 points Question 12 Suppose France can produce four phones or three computers with one unit of labor, and Sweden can produce one phone or two computers with one unit of labor. If France can trade only with Sweden, then the theory of comparative advantage suggests that: France should specialize in producing phones and import computers from Sweden. France should specialize in producing computers and import phones from Sweden. France should produce both phones and computers, and import nothing from Sweden. France should import both phones and computers from Sweden. 4 points Question 13 Potato chips and popcorn are substitutes. A subsidy for potato chips will ______the demand for popcorn and the quantity of popcorn sold will ______. (Table: Barrels of Oil) Refer to the table. What is the total amount of producer surplus (per barrel of oil) earned by all four producers if the market price per barrel of oil is $51? Table: Barrels of Oil Minimum willingness to sell Country a single barrel of oil Country A $32.00 Country B 16.00 Country C 17.25 Country D 56.99 increase; increase increase; decrease decrease; decrease decrease; increase 4 points Question 14 In the market for Good X a necessity good without any good substitutes the workers and capital in the industry can easily find work producing other goods. The burden of the tax is likely to fall: more heavily on buyers, given that demand is more inelastic than supply. evenly between buyers and sellers. more heavily on sellers, given that supply is more inelastic than demand. more heavily on buyers, given that demand is more elastic than supply. 4 points Question 15 A U.S. manufacturer arranges to purchase parts from a German supplier for 500,000 euros in six months. The U.S. manufacturer is concerned that the dollar will depreciate against the euro, meaning the dollar cost of the 500,000 euros will rise. What should the U.S. manufacturer do? lobby the Fed to lower interest rates on six-month T-bills buy a futures contract that fixes the dollar cost of 500,000 euros in six months buy an exchange rate contract that pegs the interest rate to the discount rate on interbank loans sell a naked option to cover the output spread 4 points Question 16 Which of the following scenarios would cause a speculator to buy low and sell high ? Farmers expect to have a bumper harvest of corn next year. Imports of corn begin to flood the country. The government is expected to pass legislation making it mandatory for all vehicles to use corn-based fuels within one year. The government is expected to subsidize corn production for farmers. 4 points Question 17 In a market with a price ceiling which of the following is TRUE? Buyers and sellers experience unexploited gains from trade. Resources are allocated to their most efficient uses. The supply of goods is sold by the sellers with the lowest costs. The supply of goods is bought by the buyers with the highest willingness to pay. 4 points Question 18 Consider the following statements: I. Relative to a no-trade situation, if the United States exported wheat, the U.S. domestic wheat price would rise and domestic production of wheat would expand. II. Relative to a no-trade situation, international trade causes prices of all goods to rise. I is true; II is false. I is false; II is true. Both I and II are true. Both I and II are false. 4 points Question 19 As the price of a good fluctuates, a profit-maximizing firm will expand or contract production along its: average cost curve. average product curve. marginal cost curve. marginal product curve. 4 points Question 20 An increase in demand and a decrease in supply occur in a market. What happens to the equilibrium price and quantity? The equilibrium price decreases; the change in the equilibrium quantity is ambiguous. The equilibrium price decreases; the equilibrium quantity increases. The equilibrium price increases; the change in the equilibrium quantity is ambiguous. The equilibrium price increases; the equilibrium quantity decreases.