question

If the government has stated that it will pay whatever it must to obtain 1,000 units of good X, which demand curve in Figure 1 is appropriate?

answer

B

question

Why does quantity demanded decrease when price increases?

answer

***ALL OF THE ABOVE People choose to reduce consumption of the item. People \"drop out\" of the market for the item. People find substitutes for the item.

question

Firms often seek to borrow money to expand their capital stock, and the price they pay for that money is the interest rate. What happens to quantity of money demanded if the interest rate increases?

answer

It decreases.

question

If consumers is sensitive to changes in the price of a good, the good's

answer

elasticity is less than -1

question

If orange juice prices double next year, there will be a

answer

rightward shift in the demand for grapefruit juice.

question

A shift in the demand curve for sailboats resulting from an increase in incomes will lead to

answer

higher prices of sailboats.

question

We observed that the price of a good rises and the quantity purchased also rises. Everything else being equal, it is consistent that

answer

income rose.

question

The price of coal fell and the quantity sold also fell. Everything else being equal, it is consistent that

answer

the price of oil fell.

question

When GM advertises its cars, the company is trying to cause a

answer

rightward shift in the demand.

question

In Figure 2, an increase in population will change demand from

answer

D1 to D2

question

A shift in the supply curve of bicycles resulting from higher steel prices will lead to

answer

higher prices of bicycles.

question

The demand for computers has risen dramatically at the same time that the unit cost of production has decreased. As a result, we can expect

answer

an increase in output with no predictable change in price.

question

The quantity of newspapers sold will decline if

answer

newsprint becomes more expensive.

question

\"Moonshine\" is illegal home brew made by adding sugar to accelerate corn fermentation. Ten pounds of sugar are necessary to make a gallon of moonshine. In the mid-1970s, the price of sugar tripled and the price of moonshine skyrocketed from $6 to $15 a gallon. Which graph in Figure 3 best illustrates this?

answer

4

question

Recycling of newspapers has been undermined by its success. The supply of old papers, gathered diligently by those concerned with the environment, has increased dramatically, as has the number of firms that convert the material into recycled newsprint. The quantity demanded has not changed much despite falling prices because newspapers consider recycled newsprint an inferior substitute for regular newsprint. Consequently, the price of recycled newsprint has fallen below the cost of production; recycling firms are going out of business; mountains of old newspapers are left behind. Which graph in Figure 4 best illustrates this situation?

answer

1

question

In Figure 5, an increase in the number of producers will shift supply from

answer

S1 to S2

question

In Figure 6, there would be a surplus of T-shirts if the price were

answer

$10

question

What is the equilibrium price in the table above?

answer

$7

question

At $10, what is the surplus?

answer

4,500

question

A student has a chance to see Eric Clapton in concert. The student also has a major economics exam in the morning. If the student goes to the concert,

answer

the opportunity cost of the concert is time spent studying.

question

As the term \"opportunity cost\" is defined in the text, the opportunity cost of going to college includes

answer

both tuition and the value of the student's time.

question

Which of the following is likely to affect the position and shape of society's production possibilities frontier?

answer

***ALL OF THE ABOVE volume of physical resources level of labor skills level of technology

question

The total amount of consumption of a society can be increased if

answer

individuals engage in specialization and voluntary trade.

question

From the data given in the table, the opportunity cost of increased cotton in moving from A to B is

answer

1 unit of corn....you subtract A from B in this case 16-15= 1 unit of corn

question

According to Figure 7, the opportunity cost of one more bushel of wheat is

answer

lower at B than D

question

The curvature of the production possibilities frontier in Figure 7 implies that

answer

some resources are better suited for producing wheat than for producing barley

question

In Figure 8, a point such as A

answer

is an efficient use of resources.

question

In Figure 8, a point such as D

answer

cannot be obtained given the information you have.

question

Which of the following is a good example of efficient specialization and voluntary exchange?

answer

A college professor hires someone to rototill a garden for spring planting.

question

The slope of a demand curve is almost always

answer

negative(downward), because with everything else equal, the same people will buy more of a good when its price is lower.

question

At present, faculty in the Economics Department teach introductory and upper-level courses. Which graph in Figure 9 represents the change in the production possibilities of the Economics Department after a policy of using graduate students in addition to faculty to teach introductory sections was implemented?

answer

3

question

In economics, aggregation refers to

answer

combining many markets into one overall economy.

question

If aggregate demand shifts inward over a long period of time, with aggregate supply held constant, the economy should experience

answer

recession

question

Refer to the above table. The marginal product of the fifth worker is:

answer

4

question

The idea of diminishing returns to an input in production suggests that if a local college adds more custodians, the marginal product of labor for the custodial staff will ________.

answer

decrease

question

If two firms are identical in all respects except that one has more capital than another, the marginal product curve for the firm with more capital:

answer

will lie above the marginal product curve for the firm with less capital.

question

If Marie Marionettes is operating under conditions of diminishing marginal product, the marginal costs will be:

answer

increasing

question

Perfect competition is characterized by:

answer

the inability of any one firm to influence price.

question

If a Florida strawberry wholesaler operates in a perfectly competitive market, that wholesaler will have a ________ share of the market, and consumers will consider her strawberries to be ________. Therefore, ________ advertising will take place in this market.

answer

small; standardized (commodity); little, if any

question

In the 60 Minutes Story The Price of Oil, Steve Croft argues that the sudden rise in the price of oil was not due to supply and demand (a link to the video is in the posted class notes). This statement is . . .

answer

False, because the opportunity to profit by re-selling the oil at a later time increased buyers demand for it.

question

Combining various goods and services into a convenient grouping is called

answer

Aggregation

question

For the purpose of our class, \"scarcity rent\" can be defined as:

answer

The amount a seller can charge for a good, over and above his cost of producing the last unit of it.

question

Potential GDP is an estimate of the economy's ability to produce goods and services if the

answer

labor force is fully employed.

question

If the rate of technical progress decreases, then the growth

answer

rate of potential GDP will decrease

question

The growth rate of potential GDP is the sum of two other growth rates. These other growth rates are

answer

labor hours worked and labor productivity.

question

GDP per capita is the best measure of an economy's

answer

standard of living.

question

If the population increase in India is smaller than the increase in Indian real GDP, then GDP per capita will

answer

increase

question

If the capital stock increases, then the economy can produce _____output with the _____amount of labor.

answer

more, same

question

The growth rate of potential GDP depends on

answer

***ALL OF THE ABOVE the rate of technical progress. the growth rate of the capital stock. the growth rate of the labor force.

question

GDP equals hours of work times

answer

output per hour

question

Older people often reminisce about the \"good old days\" when prices were much lower. This is misplaced nostalgia primarily because in the \"good old days,\"

answer

wages were much lower

question

If the price of pizzas has risen from $4 to $5 at the same time that the price of an hour of spinning class has risen from $20 to $30, then

answer

aerobics' classes have become relatively more expensive.

question

Last year your job at the university cafeteria paid you $9 an hour and the price of a ten-minute long distance call to your girlfriend in California was $4. This year your cafeteria job pays $9.90 per hour and the ten-minute phone call now costs $4.10. You are clearly

answer

better off because the phone call now costs less work.

question

Which of the following groups would most likely be harmed by inflation?

answer

retirees

question

The economic benefits of owning a home are greater when home prices are

answer

rising and interest rates are low

question

The rate of interest written on a contract between a borrower and a lender is the

answer

nominal interest rate

question

Rachel agrees to lend Phoebe $100 for six months and charges her interest of 2 percent. At the end of the six-month period, prices have risen by 4 percent.

answer

Purchasing power has been redistributed to Phoebe.

question

Americans viewed the 12 percent mortgage interest rates of the 1980s as exorbitantly high while they considered the 7 percent mortgage interest rates of the late 1990s as reasonable. This represents a confusion of

answer

real versus nominal interest rates.

question

Which of the following services have experienced declines in relative prices due to productivity increases?

answer

Internet access services

question

Which retail operation is most likely to have the highest costs per book sold?

answer

A small independent bookstore

question

Environmentalists worry that economic growth imposes costs on society. Among these costs are

answer

***ALL OF THE ABOVE pollution crowding waste disposal

question

If part of the labor force is unemployed, the foregone goods and services are

answer

Lost forever

question

Which of the following groups would have the lowest unemployment rates?

answer

married women

question

Discouraged workers are included in the

answer

NOT in the labor force category

question

The term frictional unemployment refers to persons who are out of work

answer

for a short period

question

When some firms fail because their output is not demanded by society, workers may suffer

answer

Structural unemployment

question

Which of the following scenarios best illustrates the concept of cyclical unemployment?

answer

Marian loses her job because of a recession.

question

When inflation occurs,

answer

workers' real income may rise or fall

question

Compared to workers in richer countries, workers in poorer countries have

answer

lower productivity/wages

question

The term human capital refers to

answer

worker education & training

question

The shrinking gap between the income levels of poor and rich countries is known as the

answer

convergence hypothesis

question

Imitation as a strategy for acquiring new technology is based on the difference in effort between

answer

creating it & looking it up

question

A nation's supply of capital refers to its level of

answer

production equipment

question

The financing of investment spending is often made possible by

answer

borrowing

question

The profitability of an investment project will increase if

answer

real interest rates decrease

question

In 1997, in order to stimulate capital investment, President Clinton and Congress

answer

reduce the tax on capital gains

question

Property rights uncertainty will usually cause

answer

lower levels of investment spending

question

Lower levels of education and training are often associated with low levels of

answer

BOTH A & B Production Productivity

question

In the United States, the wage premium for college education has been

answer

increasing since 1980

question

As the economy becomes more technologically sophisticated, the wage premium can be expected to

answer

continue rising

question

Higher rates of productivity growth are most closely associated with higher rates of

answer

investment spending

question

The productivity speed-up of the 1950s and the 1960s could have been caused by

answer

civilian innovations after WWII

question

National Income is

answer

***ALL OF THE ABOVE the sum of all wages and salaries, interest, rent, and profits in the economy. equal to the money value of national output. the before-tax income of all individuals in the economy.

question

Disposable income can be defined as national product

answer

minus taxes plus tranfers

question

Why is it true that domestic product and national income must be equal?

answer

The value of final product must equal the sum of resource income that produced it.

question

Which of the following is a transfer payment?

answer

A student receiving tuition from the federal government

question

The Phillips curve shows the relationship between

answer

the rate of inflation and the rate of unemployment.

question

If the fluctuations in the economy's real growth rate from year to year are caused primarily by variations in the rate at which aggregate demand increases, then data would show

answer

an inverse relationship between inflation and unemployment.

question

If the aggregate supply curve is vertical, then the short-run Phillips curve will

answer

also be vertical

question

In the 1960s and early 1970s, many economists and policy makers thought the Phillips curve was

answer

a \"menu\" of possible choices available to policy makers.

question

The Phillips curve is built on the assumption that business fluctuations are

answer

from the demand side.

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