Exam econ222 summer 03 Papakyriazis

Exam econ222 summer 03 Papakyriazis - ECON 222 - Prof:...

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Unformatted text preview: ECON 222 - Prof: Takis Papakyriazis Summer, 2003 FIRST EXAM 1. Which of the following is the best definition of economics? a. The study of how individuals and societies choose to use the scarce resources that nature and previous generations have provided. b. The study of how consumers spend their income. c. The study of how business firms decide what inputs to hire and what outputs to produce. d. The study of how the federal government allocates tax dollars. 2. The study of economics a. is a very narrow endeavor. b. is a way of analyzing decision-making processes caused by scarcity. c. is concerned with proving that capitalism is better than socialism. d. focuses on how a business should function. 3. The concept of opportunity cost a. is relevant only to economics. b. can be applied to the analysis of any decision-making process. c. applies to consumers but not to firms. d. refers only to actual payments and incomes. 4. If you own a building and you decide to use that building to open a restaurant, a. there is no opportunity cost of using this building for a restaurant because you own it. b. there is an opportunity cost of using this building for a restaurant because it could have been used in other ways. " " ' c. there are no sunk costs involved in this decision. d. the only cost relevant to this decision is the price you paid for the building. 5. Which of the following is not a resource as the term is used by economists? a. Land b. Labor c. Buildings d. Money 6. During the Persian Gulf War many of Kuwait's oil refineries were destroyed. This would best be represented by a a. movement down Kuwait's production possibility frontier. b. movement off Kuwait's production possibility frontier to some point inside the frontier. c. shift of Kuwait's production possibility frontier toward the origin. d. movement up Kuwait's production possibility frontier. 7. An economy in which individual people and firms pursue their own self—interest without any central direction or regulation is a(n) command economy. laissez-faire economy. invisible-hand economy. private-sector economy. 9*.” 9‘!” 13. 14. 15. 16. 17. 18. Refer to Figure 3.2 below. Which of the following would be most likely to cause the demand for macaroni and cheese to shift from D1 to D0? An increase in the price of macaroni and cheese. An increase in the price of flour used to make macaroni and cheese. An increase in income, assuming macaroni and cheese is a normal good. An increase in the quantity demanded for macaroni and cheese. 9-? 9"!” Price 9, Do Cartons of macaroni Q and cheese Figure 3. 2 During an economic downturn when consumer income falls, the demand for ice cream cones increases and the demand for chocolate cheesecake decreases. This implies ice cream cones a. and chocolate cheesecake are complements. b. are a normal good and chocolate cheesecake is an inferior good. c. are an inferior good and chocolate cheesecake is a normal good. d. are an economic bad and chocolate cheesecake is an economic good. When the decrease in the price of one good causes the demand for another good to decrease, the goods are a. normal. b. inferior. c. substitutes. d. complements. A change in the price of a good or service leads to a that leads to a a change in demand; movement along the demand curve b. change in quantity demanded; movement along the demand curve c change in demand; shift in the demand curve d change in quantity demanded; shift in the demand curve A change in income, preferences, or prices of other goods or services leads to a that causes a change in demand; movement along the demand curve change in quantity demanded; movement along the demand curve change in demand; shift of the demand curve change in quantity demanded; shift of the demand curve 9.097?” Refer to Figure 3.7 below. Assume that there are only two people in the market for compact discs: Person A and Person B. Along the market demand curve for compact disks, at a price of , quantity demanded would be a. $12; 5 b. $12; 7 0. $10; 13 (1. $10; 16 ________________________.______-.————————— Quantity Demanded Quantity Supplied Price per Pizza (Pizzas per Month) (Pizzas per Month) $4 1,000 700 $6 900 750 $8 800 800 $10 700 850 $12 600 900 ‘ Table 3.1 21. Refer to Table 3 .1 above. If the price per pizza is $10, the price will a. remain constant because the market is in equilibrium. b. increase because there is an excess demand in the market. 0. decrease because there is an excess demand in the market. d. decrease because there is an excess supply in the market. 22. Refer to Figure 3.12 below. In the Rollerblade market, you accurately predict that price will a. increase, the quantity demanded will fall, and the quantity supplied will rise. b. increase, the quantity demanded will rise, and the quantity supplied will fall. c. decrease, the quantity demanded will fall, and the quantity supplied will fall. (1. decrease, the quantity demanded will rise, and the quantity supplied will fall. ‘14 0 a _ o i 3. g a :1 .3 a? D. o 50 150 Q Nmnbet ofpairs of Rollerblades per week Figure 3. 12 23. Refer to Figure 3.13 below. Assume hamburgers are a normal good. An increase in income will cause a movement from a. Point A to Point B. b. Point G to Point F. c. D1 to D2. (1. SI to $2. .3 3 3 ’s g 5‘ ‘E .= 2%. i G '5 F Hamburgers per month Q 28. Improvements in technology have reduced the cost of producing personal computers. As a result, you accurately predict that in the market for personal computers, there will be a(n) a. b. c. d. 29. increase in the quantity supplied of personal computers, a reduction in the price, and an increase in the quantity demanded. increase in the supply of personal computers, a decrease in the price, and an increase in the quantity demanded. increase in the supply of personal computers, a reduction in the price, and an increase in the demand. decrease in the supply of personal computers, an increase in the price, and a decrease in the demand. An insect that is resistant to currently used pesticides has infested the cotton crop, and this year's crop is only half of what was produced last year. You accurately predict that this a. b. 30. a b. c. d. will shift the supply curve of cotton to the right, the equilibrium price of cotton will increase, and the demand for cotton will fall. will shift the supply curve of cotton to the right, the equilibrium price of cotton will increase, and the quantity demanded of cotton will decrease. will shift the supply curve of cotton to the left, the equilibrium price of cotton will increase, and the quantity demanded of cotton will decrease. will shift the supply curve of cotton to the left, the equilibrium price of cotton will increase, and the demand for cotton will fall. Refer to Figure 3.17 below. When the economy moves from Point A to Point B, there has been an increase in demand and an increase in supply. an increase in demand and an increase in quantity supplied. an increase in quantity demanded and an increase in quantity supplied. an increase in quantity demanded and an increase in supply. Figure 3.17 SCENARIO l: Lettuce and spinach are substitutes. Lettuce and tomatoes are complements. Lettuce is a normal good. During the winter, about 20% of the lettuce crop was destroyed by flooding. 31. a. b. Refer to Scenario 1 above. As a result of the flooding during the winter, you would expect that the price of lettuce would increase, the supply of lettuce would increase, and the quantity demanded of lettuce would decrease. the supply of lettuce decreased, the price of lettuce increased, and the quantity demanded of lettuce decreased. the price of lettuce increased and both the quantity of lettuce supplied and the quantity of lettuce demanded increased. the supply of lettuce decreased, the price of lettuce increased, and the demand for lettuce decreased. 36. Suppose the economy suffers a high rate of unemployment. According to Keynesian economists, the government should fme-tune the economy by a. decreasing money supply. b. balancing the budget. c. not doing anything. d. increasing government spending. 37. Rapid increases in the price level during periods of recession or high unemployment are known as a. stagflation. b. stagnation. c. depression. d. inflation. 38. The total demand for goods and services in an economy is known as a. gross national product. b. aggregate demand. 0. total demand. d. gross domestic product. 39. The total market value of all final goods and services produced within a given period by factors of production located within a country is a. gross domestic product. b. gross national product. 0. net national product. (1. net national income. 40. Gross national product is the total market value of | a. all final and intermediate goods and service produced. by resources owned by a country in a given year. b. all final and intermediate goods and services produced in a country, regardless of who owns the resources. c. all final goods and services produced in a country in a given year, regardless of who owns the resources. d. all final goods and services produced by resources owned by a country, regardless of where production takes place. 41. Gross domestic product measured in terms of the priCes of a fixed, or base, year is a. current GDP. b. base GDP. 0. real GDP. d. nominal GDP. 42. If real GDP in 1999 using 1998 prices is lower than nominal GDP of 1999, then a. prices in 1999 are lower than prices in 1998. b. nominal GDP in 1999 equals nominal GDP in 1998. 0. prices in 1999 are higher than prices in the base year. (1. real GDP in 1999 is larger than real GDP in 1998. Production Production Year 1 Year 2 Year 3 Year 1 Year 2 Year 3 Good X 50 75 100 $1.00 $1.00 $1.20 Good Y 100 100 130 $0.60 $0.75 $1.00 Table6.5 M 5‘, . 44 I» N “9 W 9 ...
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This homework help was uploaded on 02/08/2008 for the course ECON 222 taught by Professor Lindahl during the Summer '06 term at Cal Poly.

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Exam econ222 summer 03 Papakyriazis - ECON 222 - Prof:...

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