Real Midterm Key

Real Midterm Key - Midterm 1 Key Version#1 1 Suppose one...

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1 Midterm 1 Key Version #1 1. Suppose one observes that when the price of peanut butter increases, the demand for jelly increases. One must conclude that A. peanut butter and jelly are normal goods. B. peanut butter and jelly are complements. C. peanut butter and jelly are substitutes. D. peanut butter and jelly are inferior goods. AACSB: Analytical Skills Bloom's: Application Frank - Chapter 003 #73 Learning Objective: 3-4 Section: Predicting and Explaining Changes in Prices and Quantities 2. Production Possibilities Curves for large economies generally have an outward bow shape because A. opportunity costs tend to increase with increases in production. B. opportunity costs tend to decrease with increases in production. C. specialization gives some producers a comparative advantage. D. as more resources are used to produce the same good, those resources become less and less expensive. AACSB: Analytical Skills Bloom's: Knowledge Frank - Chapter 002 #104 Learning Objective: 2-2 Section: Comparative Advantage and Production Possibilities 3. One observes that the equilibrium price of T-shirt increases and the equilibrium quantity falls. Which of the following best fits the observed data? A. A decrease in demand with supply constant B. An increase in demand coupled with an increase in supply C. A decrease in supply with demand constant D. An increase in demand with supply constant AACSB: Analytical Skills Bloom's: Application Frank - Chapter 003 #112 Learning Objective: 3-4 Section: Predicting and Explaining Changes in Prices and Quantities
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2 Frank - Chapter 002 4. Refer to the figure above. Of the labeled points, ______________ are efficient. A. only w, x, y, z, and v B. only t and u C. only x, y, and z D. only w, x, y, z, v, and t AACSB: Analytical Skills Bloom's: Understanding Frank - Chapter 002 #46 Learning Objective: 2-2 Section: Comparative Advantage and Production Possibilities Frank - Chapter 003
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3 5. Refer to the figure above. At a price of $20, A. the market would be in equilibrium. B. there would be excess supply of approximately 25 units. C. there would be excess demand, but it is impossible to know by how much. D. there would be excess demand of approximately 25 units. AACSB: Analytical Skills Bloom's: Application Frank - Chapter 003 #45 Learning Objective: 3-3 Section: Market Equilibrium The supply of Shrek action figures is shown below. The bold, solid line is the current supply. Frank - Chapter 003 6. If the price of the plastic used to make action figures rises, supply will A. shift from Current Supply to Supply A. B. not change because a change in raw material prices cannot affect market prices. C. shift from Current Supply to Supply B. D. remain at Current Supply because Demand for Shrek figures is so strong.
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This note was uploaded on 09/14/2009 for the course ECON 1 taught by Professor Tang during the Winter '08 term at UCSD.

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Real Midterm Key - Midterm 1 Key Version#1 1 Suppose one...

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