cid23_Old-Exam1

cid23_Old-Exam1 - Exam #1 Econ man - 05] Name MULTIPLE...

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Unformatted text preview: Exam #1 Econ man - 05] Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the quest-inn. I) Scarcity requires that we A] pmduoc efficiently. 5] learn to limit our wants. C] make ehoioes about what goods and services to produoc. D] haw: unlimthJ mamrL'L-s. 2) Microeconomics includes the stud}.r of the .t'i] aggregate effects on the national economy. 5] recessions and inflation in the global economy. C] choices made by individuals :3 ad businesses. D] reasons why the Federal Reserve changes interest rates. 3) Ali decides to attend the one—hour review session [or microeoonomics instead of won-long at his job. His job pays him 510 per hour. Ali's opportunity cost ofattending the review session is it] the 510 he could have earned at his iob. B] the value of the session minus fine 51!} he could have earned at his job. C] nail-ting. because the review session does not cost anything. D] equal to Hie benefit he gets from the review session. 41-] Instead of studying for an additional two hours for the economics final, Leann decides tn watch a movie. Leann is making atn} A} decision that does not involve an opportunity cost. l3] rational decision it her marginal cost from the movie is greater than her marginal benefit. C} Iatinnal decision it her marginal benefit Erin-r1 tl'll-l movie iti greater than her marginal cost. Ti} irrational derision berause. studying is mime important than watching a movie. 5] Why do mart}r college athletes leave college to become professionals before their have completed thelr degree? it} because the opportunin cost of staying in college is low B) because the opportunityr cost oi staying in college is high C] because the Ctmeth cost oi staying, in college is zem D) bu'ausu the marginal benefit of staying in college is zero 6} Which of the following could lead the production possibilities frontier in shill inward? A] an increase in productive resources B] a better educated labor force C} the ilisooverg,I of new sources of raw materials D] an earthquake that destrovs several major factories 7'] lf ll'ranr Eu unnmplnymm in an cum-my. Ibcn. 111: A] pumuutiml mam-abilities [runner will shlfl inwards. fl] mum}- Lfinpcratinfiatan umnalmbln pun-1. C] pit-ductium pcms'lblliljus :l'mnlier will. nl'lilhmlwandn. D]Em11fll'l1}' Lipmducingatz pnintim'nie I11: prnducrion Pmiblhtius [nu-IEIH. lee cram: [mllhru n! {alum pu- yur} E I 1 3 4 5 a Mllk {mlllluns ofglllum np-er yen} Bil ThL- figure abm'c dam IJ'H: pradunbnn ptmbu'l'mm [mnlnr For: munuy. A. mth of] mll'llon galfmr. nf mill: and $ million fiellnm nf in: mum is- Arwallmmhh. B} anainublu and. ha» ['ull umplulymnnl: -:|I Emma. flammable and haslm Ihan lullempkrymento! remun‘es. D! Marc infinrmal'im is:de Irl deal-mm: if flw WINE I5 annmbk' :37 mt. Finns {millions per year} D I 2 3 4 5 El Tacos {millions per year) ‘3) The. figure above shows a nation's production possibilities frontier. In the figure, point A almws Al the maximum pizza thatean be produced. 3) the minimum pizza that can be produced. C] an unattainable point. DJ an attainable pointwuh unemployed resuuruas. Fish "Fruit Poesibilig lEunds} [Em-Ids] A 35’ 55 B 3] '?B C 20 '99 D 9 99 1”] Robinsfln Crusoe divides his lime between cabd'iing fish and gathering fruit. Part of his production possibitities fruni'ier is given in the shove table. lf Mr. Crusoe inereases the amounth fruit he gathers from 55 to 90 pounds, the L't‘ppurtunity CUE-l is M 35' puunds of fish. B} M pounds of fish. C} ‘1? pounds- of fish. DJ 3-]. pounds of fruit. 113 The boww out [WCHVE] shape of the pmduclion possibilities cu we impties that us pnxiuLt-iim of one gin-nu M inure-uses, society must forgo increasing amounts of another glut. B] increases, societyr must forgo decreasing arnuunls of amtther good. C] decreases, production [‘1‘ "flier gmldti ducmaacs as we“. Di increases, production (riot-her grinds ineleafiest as well. 123 Hank IeqI'lIEB I hut—11' in cut the gram and 3 hours to clean the house. “if: sister Holly requires 1 hour to cut the grass and It hours to clean the house. Whid-t of the foilc'rw'lng statements is true? M Hank has 5: mmpardtive advantage 'In both cutting the grass and cleaning His house. 5] Holly has a comparative advantage in cutting the grass, C] Hank has it lower opportunity unit of cu fling the grass. D] Hank has i111 absolute advantage in both cutting the grass and tie-fining the house. 13-] For mnlry Nmth, H11: opportunity cost incurred when 3trac1nna an: prudumd is El watches. Fur country SDutl1.the opportunin cost incurred when 5 hat:th are produced is IOU watd-ws. which muntry has the Eumparah'vu advantage in the production of fractured A) North [3} Soulh {:3 Both have IJ‘IL" compamI-lve advantage in the production In!" tracturs, I?) Neimer L'Ulll‘iL'l’)’ has the iJm'nPEII—dfivu advantage Ln {he Pmduclmn L11 [mama 14‘] Gains from trade A) L‘JL‘L'IJI' when one party of the trade has an absoiute advantage 'in hmh ginds B) rusuit :in being ab]e to consume beyond IJ-u: trading individuals production possibilities Enmt-icm Ci untur when nelIhI-rr party has mmparalive advantage D} um: r when 012121;):l'ul'Lit}r costs an: equal Sada (hundreds of gallons per day} ID I 2 3 4 5 a Bowed water [hundreds of galians per day} 15) In Hm abnvfl figure, Jack's Opporhlnlty umth pmducing 1 gailnn tut-soda. is of butlch water. AlligaHuns B] U20fagal]:m L')6gn]|ons Di 1.:‘4nF55ailnn “'3 USiTlg the figurfl BMW. “Jack and Iii] specialize and gain from bade. than A} JaCk pmdumfi equal amounts of gallons of water and butllL-d water. ii} Jack apuciai'mes in the pmduc‘tion 0E buitlcd watL-r. C]! Jack and fill: pmduce bayond. 1119“ J’J'F. D} Jack HPHE‘iaTlIOt‘fi in the production of soda. IF} Huey and Steve can grow polaioes or Mama The table abave shows the pounds of polaluus and mam-m.- Huey and Steve can gum in a week. Based. on 1he tablet which nt du: folluwirlg statements is correct? A} 5101-10 has an abmluta advantage in both potatoes and tomatoes. B] Huey I'm-i an absnlute advantage in bout pntatuaa and tumatmfi. C} Steve has an absolute advantage in pinata-es :mly. D] Huey has an absoluie advantage In pulatoes 0115?. 18] AfiliumE the people of Indiana refuse to allow gtm-dii nni produced within the state to be sold. Keeping in mind IJ'u: gains Inn-n trade, what “mild happen to Ihe amount of glmdli and services ournsurned wimin die state? A] It would not change. 8] Itwould increase. CJ It would decrease. D) There is not enough inlormatian given In determine lthe outcome. 19) Car insuranfle and L‘flrs art: mmplcments. Ii the price of car insurance increases. the A) demand for cars shift-a lufl. B) demand for cars Shift; right. C) demand fur Car inmrance shifts right. D} both demand fur cars and insurance are unafiectcd 20) Water butllcrfi anrmuncc that next month the price [if battled water will rise by 25 percent. midi of the following occurs immudiaEL-I'y? A} The demand for tap water: increases. [i] The demand for lemonade increase-s. C) The demand fur hntlhd water decreases. D} The demand for [milled waIEr mere-ages. Lu Price (dollars per Price {dollars per nectar} scooter} I s ‘1‘ s / D, D. D I D! Quantity {thousands of Quantity {thousands of nectar: per month] SCOD‘LEI'S per month} Figure A Figura 5 Price {dollars per Price {dollars per scooter) scooter} Quantity [thousands 01' Quantity {thousands of scooters per mar-Eh] scooters per month] Figure C Figure D 21) Sew-let's and bicycle: are substthltes. Suppose that the price 0! a bicycle tails. Whidt of fin.- figures above hast iilustmtcs hnw this [all in prtuu affects the demand curve for scnntL-rs? A} Figure A B]! Figure B C} Figure C D} Figuru D 22} A student al New York University usud In takc the Redhound. bus. when she visited her grandmother in Boston. After graduating, aithnugh Ihc has fun.- and the piane fare were the same as Hm}- wcrr: when she was a student. with a: well paid iub on Wall Street she now takes thr;1 Fulani.1 tn anmri. to visit her grandmother. For this student, travel by Redhnrund bur. is A] d norm-mt 50ml. H] an inferior grand. C] a subs-titular: Kurd. D] a mmpiemcnl gov-d. 27”] The law DI' supply status that other things remaining the name. a dccrcafie in the price at a kayak Icudai In A] II drama”! 'In the qiuitrtlil)r of kayaks. Supplied. SJ 3 decrease in the quantity of kayak-.- cinmandvd. C] an increase in the quantity of kayaks Supplied. [1] no other changes in he market for kayaks.. Price (dollars per bushel a! corn] Quantin (millions of bushels ai corn per year} 24} The album: figure iilquTatHfi the marker for mm.1ip0j.nl"a"represenis the original equilibrium and pt1inl'b"fl1|: new equililtnriurnr which uf H11: fuiiuwing cnuid. have caused the change? A} an increase in urnHurnerfi' pmfcrenres [or com 11) an increase in msumers' income C} an increase in labor costs D} an improvement in the tedmoiogy cl producing mm 25} Suppose the market print: of :- Fwd-Ind airs-trait I5 $6 per pound and fine equilibrium priee is 59 per puund. Whal wil] take place? A} There is a shortage. so 111:: prim falls and quantity demanded imreases. l3} There is a surplusr so the priDL' falls and quantity demanded increases. ES} There is a shortage. sri ihe prim and quantity demanded decreases. D} There is a shortage, so 1he priee rises and quantity demanded increases. _Iirice I " Quantity demended Dummy supplied (dollars Per 51mm! [gallons of gasuline} igallans. of gasoline] 1.73- 33733: 4:41.074 1.53 196.39“ 423.1113 1.65 412,031 412,031 1.62 411399 391,565 26} The labia about sham: Hue Himatiun in the gasoline market in 'I‘uls-ar Oklahoma. II' the price at a gailon oi gamiine is 51.75. lhen A] menu is a surplus of Hamlin-u: in Tulsa. B} were is a sharing: of gamlim: in Tulsa. C} the gasoijnu market in Tuisa is in equilibrium. D} wiihcrui n1er infun'naiion we cannoi determine if Ihere is a murpius. a shortage, m' an equilibrium in [he gasnlinu market in Tulsa. 23"] Sum: m:me have suggested. mat ol the natal eierlrieiry consumed in fire United States. 8 percent Ln.- ueed up by the Internet. Thus an intrua 59d demand by mburnL-rs tn surf the Internet wi[l the equilibrium pride 0:! electricity and the equilibrium quantity of elmtrieity. A] raise; inn-case B] raise: decrease C) lower; increase D) lower: decrease EU) Suppose IJT-lt the equilibrium price and quantity nan houses hmh increase. which nf Ihe [allowmg could be .1. Laurie of this change? A} The wage paid carpenters. whu build. new houses mighi have risen. B} P. tedmnlogieal edwnee in fram ing a new huuse might have occurred. C} The rent fur nearby aparlments might have [alien [1'] More buyers might have moved into the area. 29] Because cl a sharp ind—truest: in the price of gamiine, the demand. forSporls Utility vehicles [SUV5) has decreased. 50. the high price of gasoline leads In a leftward shift of the A] durnand t‘urlrr.‘ fur SUVS and 111:: supply curve of SUM-’5. EJ demand curve for SUVS and mu ahift in. the su pply curve [11’ SUI-is. C] demand curve for EUVS and a rightward shift of fine Supply curve ufS-UVs. D) Nana of the above answers, ia- L'fll'mcl. 30) Suppmie that the pride of bread rises. This rise cnuld be the result nf A} a decrease in the supply nfbn-Iad. B] an increase jri IJie supp]? of bread. C) a decrease in the demand for bread. D] Bnfli answers A and C are enrraet. Price {dollars per Price (dollars per ton of plymod) ton of plywood} Quantity [tons ef Quantity (am: of plywood per month) pdywuod per month] Figure fl Figure B Price (dollars per Price {dollars per ton Bf plywood} ton of plywood) D QuantityI {tons of Quantity {tons cl ply-wood per month} plywood per month} Figure C Figure D 31] Contractor-“i can use plywood or pruh'fiebd W006i to construct walla. Suppfise the price of puma wood increases. Which of I‘J'IL‘ figures abm'e best illustrams the effect {3! dis change on lJ-u: ma that for plywood? A) Fig-um A E} Figure B C] Figure C Di Figure 1'} 32] ll IJIL‘ demand rurvn for desktop campuer :ehifts lighiwald and at +111.- Ha me time the su pply i:ch 911le leflward. IJ'LL'TI A} the Pquilibri'um quizu'iiit},r definitely increases. 13} the Equilibrium quantity definite]? dmeases. C) th? muiiibrium quantity definitely remains the same. B} More inntTnaiiLm is mended tn determine the eficct on Elm.- L'qu'iilb‘TilflIl quantity. 33) Uurivcd demand means 11ml the demand for a fa cm: of pruduutiun is Lieu-ij from the A} supply of Li'lfil factor of prndu crion. B} prim? of that Iaclor of pruduclion. C} demand for 11w- gfluds and services the fact”: uf pmcluclinn is used In prudum. 1)} meats of production. Quantity.' of labor Marginal Product: trainers] [clients Er hourl 1 2 3 4 r—INU-h- 34] Kevin owns a pummal training gym in Laredo. Texas. He is considering adding more personal trainers to his gym. which eharges $41 per client. per session. The above table show: the marginal product of trainers in Kevin's gym. II Kevin him—'5 EhrL'i: lraincm the value of die marginal product [marginal revenue product) of the third trainer equals Al 2 clients. 13} $32. C19 clients D1386? 35l Suppose Mango runs a glue factory in Knuckle. North Dakota. Mango wants to fin: his cousin Becvo for not wnrking very hard at making glue. H Firing Hm“! would save Mongo $6.11per hour in wages and the value at Bee‘ru'tt marginal product equals $129 per hour. to maximize his profit. thgn should It) fll'l‘. Ree-vet. Bl keep Bee-m employed. C) add another worker,'1'eevo. lj-eevo's sister. WI'IUHE value of the marginal pro-duct would be $4.33 per hour. DJ There is not enough infttnnation given In dL‘tm‘rnim-z what Mung“ should do. 3ft) Which of the following would decrease the wage at workers in the grape picking market? A) a deerease in the number of migrant wart-tars 1331a decrease in the demand for gra pas Cl an inert-arse in the demand fur wins D) the dereluprnent of new machinery that increases the margina] product of grape pickers Price lil'uarttjtyir supplied Quantity demanded (dollars Per slice {slices of pizza (slices of plus of pizzal p_er weekl Eweekj 1 10 Fit] 2 20 40 3 fill at] 4 4D EU 5 SD in 3?} The demand and supply schedules in: slices of pizza are in Lhe table above. A pTiIJL' miling oi $2 per slice results In A] a surplus at 2ft slices of pizza. lit a shortage of 20 slices ut' pizza. C} a shortage of 40 Eliot—'6 uf pixra. D} neither a shortage nor a surplus. 33} Suppose the equilibrium price for an aparlrnenl in Denver is 51,050. A rent ceiling of 5?.55 per month leads to A] a surplus of apartments in Denver. lit a shortage oi apart-menta- in Denver. C} no Change in tl'IL' Denver apartment market. lJlI fair prices in the Denver market. in Wage rate [dollars per hour) D 0 20 40 60 W 100 I20 I40 Quarain {thousands oi workers) 39] The Figure above ahnws the labor market in a region. If a minimum wage of $8 an hour is imposed, then them are unemployed workurs. m 20.000 B} 44mm C] mom 0] aumn 410] ‘5qu tho: equilibrium wage rate for apriml pickers is 55.9.? per hour in California and al m1 wage rah! thy:r equilibrium quantityI (If aprlcut PleL‘TH is 13,351]. IF the minimum wage i5 rial at $.51] per hflur' [hen the fir] quantity ol' aprimt pickers cmplnyccl iricrcafies. fl} quantity of apricnt pickerfi emplnyed. decreafiefi. C} quanlily of apricot pickers employed does not change. Li} wage rate for apricot pickers decreases. 41} The shortage created by a rent ceiling below the equilibrium rem is smallest when fine demand in: housing is and H11: Supply of hausing is. A} elastic: elastic E) L'lafililL': l‘nElthlE C} inelastic; elastic D} inelain t; inL’last'I: 42) Nuiiher the demand rlnT The 5uppl3a nffiugar is perfectly elastic or int-lastic. II the government imposes a 5 percent tax un sugar, the A} price of sugar falls by 5 percent. B] price [31‘ sugar inmasea by less than 5 pertm'rl. C} price of SI: gar lines nrli change. D} I:|r:|aril'il'_yI nf sugar intmasw. 1] Price [dollars per pizza} D 20 40 60 30 I'm 12!] I40 Quantity {pines per hour) 43} In “:10 figure above. suppose that fl'u: gnvcmrnent imposes a lax oi $4 per pizza. Then. the tax revenue cnllectecl by the government equals A] $240. B) 53.20. Cl$lbtl D] $120. 414} Fm“ a given sums”.I elasticity. the min: inelastic the demand [or a good. the larger the share nf fl-ie tax [in a pruduct paid by the :1] buyers. E] sellers. Cl paflici pumbt UEhL‘r than the buyers and sellers. U] government. 45] The elasticity ul demand is used tn Al demminu if LUTlSLIITIL'l'E I.vill a}: will not buy a product. Bl mcafium hut-v weaponm've consumers are to a change in price. C] measu re hnw elastic a product's supply is. D] find the market equilibrium. 46] Suppose the Chicago linfmcers football team lowers Helmet primes by ‘13 percent and as a result the quantity of tickets demanded increases by 21 percent. This response means that the demand for Enforcer ticket-.- is A] inelastic. B) elastic. C] unit elastic. D] perfectly.r inelastic. 43"] Suppose the demand for peaches sold [mm one roadside stand in Gem-gin is perfectly elastic. This fact means that a T permnt increase in the prim: d13th by the owner of this stand leads to Al zen! peaches sold by this stand. 3] no change in the quantity demanded at this stand. C] a 7 percent decrease in the quantity.r demanded at tints Hl'and. D] a ? percent decrease in demand at Iinis stand. '12 ‘15} lfu 2 pun—"Ht fix in price [cads to a 4 percent Linemast in qu antiry demandcd, thendm-nand is A} elastic and tutai revenue decreases. B} Mimi: and total revenue increases. C} inelastic and iota] rL‘Vcnui; tic-creases. D} elastic but we cannut tail what happens to total m-unuc will'mul more informaiion. 49] Ii 3 5 percenl decrease in income leads to a. 15 percent dcucasc in it”: demand for a good. the intumr: elasticity Lnfdemand equals ,_ A] —1:'3 and the 309d is an inferior good. B] 133 and dL'marLd im- the good is income L-iaailic. C] 3 and the gun-cl it'i a non-nal good. D) -3- and the demand int the good is income incissiic. 50] H product's price clamidty of demand is likcty In bu: greater A) if it UI'IIJ" has a few substitutes. B) if wmumcrs spend a melt FIOth of incnrne on Ihe product. Ci lJ'u: less time :nmumcrs have 10 adpst in prim changes. m if H16 Producl 15 a. luxury gum—L mi apprised to a necessity. 13 ...
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This note was uploaded on 04/08/2008 for the course ECON 0100 taught by Professor Kenkel during the Fall '08 term at Pittsburgh.

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cid23_Old-Exam1 - Exam #1 Econ man - 05] Name MULTIPLE...

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