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ECN 211 Review 1_BB

ECN 211 Review 1_BB - ECN211 Review#1...

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ECN 211 Macroeconomic Principles Review#1

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Q1) If a student stated, “ASU should increase  out-of-state tuition and decrease in-state  tuition tuition fees,” this statement would be  considered a: [A]  normative statement . [B] fallacy of composition. [C] association as causation. [D] positive statement.

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Q2.  Assume initially the economy is at the equilibrium point E.  Assume the good is  an inferior good.  If consumers’ incomes decrease, while at the same time  suppliers become pessimistic about future profitability.  The new equilibrium will  be? A) A B) B C)  C D) D E) G Q \$ D 1 D 2 D 3 S 1 S 2 S 3 A B C D E F G H I
Q3) Using the diagrams above.  Suppose there is an increase in the level of  education attainment in the labor force and labor is an input into the  production of good Y only.  Which diagram best represents how the PPC  will shift?   A) A B) B C)  C

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Q4) Suppose the demand curve is: P = 100 – Qd and the supply curve is : P = 25 + 2Qs. What is the equilibrium price and quantity. A) P= 50, Q=50 B) P=75, Q=25 C) P=100, Q=25 D) P=50, Q=75 E) None of the above.
Q5) Suppose the demand curve for good X is: Qd x  = 1000 – 0.3P x  + 0.1Inc - 0.1P Z  + 5P Which of the following is true? A) X is a normal good.  Also X and A are substitutes. B) X is a normal good.  Also X and Z are substitutes. C) X is a normal good.  Also X and Z are complements. D) X is an inferior good.  Also X and A are complements. E) Both A and C are correct .

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Q6) If the price elasticity of demand is equal to -5, a 2 percent  increase  in price will cause the quantity demanded to  __________ by __________ percent and total revenue would  ________   [A] increase; 10; increase [B] decrease; 2.5; decrease [C] decrease; 10; increase [D] decrease; 10; decrease
Combination Good X Good Y 1 0 100 2 10 60 3

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