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ECON EXAM 1

question
A grocery store sells a bag of potatoes at a fixed price of​ $2.30. Which of the following is a term used by economists to describe the money received from the sale of an additional bag of​ potatoes?
A. marginal revenue
B. gross earnings
C. pure profit
D. marginal costs
answer
A. marginal revenue
question
If the price of grapefruit​ rises, the substitution effect due to the price change will cause

A. a decrease in the demand for​ oranges, a substitute for grapefruit.
B. a decrease in the quantity of grapefruit supplied.
C. a decrease in the quantity of grapefruit demanded.
D. a decrease in the demand for grapefruit.
answer
C. a decrease in the quantity of grapefruit demanded.
question
A demand curve shows
A. the relationship between the price of a product and the total benefit consumers receive from the product.
B. the willingness of consumers to buy a product at different prices.
C. the relationship between the price of a product and the demand for the product.
D. the willingness of consumers to substitute one product for another product.
answer
B. the willingness of consumers to buy a product at different prices.
question
What is the difference between an​ 'increase in​ supply' and an​ 'increase in quantity​ supplied'?

A. An​ "increase in​ supply" means the supply curve has shifted to the right while an​ "increase in quantity​ supplied" refers to a movement along a given supply curve in response to an increase in price.
B. There is no difference between the two​ terms; they both refer to a shift of the supply curve.
C. An​ "increase in​ supply" means the supply curve has shifted to the right while an​ "increase in quantity​ supplied" means at any given price supply has increased.
D. There is no difference between the two​ terms; they both refer to a movement along a given supply curve.
answer
A. An​ "increase in​ supply" means the supply curve has shifted to the right while an​ "increase in quantity​ supplied" refers to a movement along a given supply curve in response to an increase in price.
question
In​ 2004, hurricanes destroyed a large portion of​ Florida's orange and grapefruit crops. In the market for citrus​ fruit,
Part 2
A.
the supply curve shifted to the left resulting in an increase in the equilibrium price.

B.
the demand curve shifted to the left resulting in a decrease in the equilibrium price.
C.
the supply curve shifted to the right resulting in an increase in the equilibrium price.
D.
the demand curve shifted to the right resulting in an increase in the equilibrium price.
answer
A. the supply curve shifted to the left resulting in an increase in the equilibrium price.
question
20) In 2010, Hooverville consumed 205,000 tons of sugar. In 2011, sugar consumption rose to 245,000 tons. Which is the correct formula for the percentage change in sugar consumption?
A) [(205,000-245,000)/245,000] x 100
B) [(245,000-205,000)/245,000] x 100
C) [(245,000-205,000)/205,000] x 100
D) [(245,000-205,000)/(205,000+245,000)] x 100
answer
C
question
In​ February, market analysts predict that the price of titanium will rise in March. What happens in the titanium market in​ February, holding everything else​ constant?
Part 2
A.
The quantity of titanium demanded and the quantity of titanium supplied both increase.
B.
The supply curve shifts to the left.
C.
The supply curve shifts to the right.
D.
The demand curve shifts to the left.
answer
B.
The supply curve shifts to the left.
question
In a production possibilities​ frontier, a point​ ________ the frontier is productively inefficient.
Part 2
A.
at either intercept of
B.
inside
C.
on
D.
outside
answer
B.
inside
question
The natural resources used in production are made available in the
Part 2
A.
goods and services market.
B.
product market.
C.
factor market.
Your answer is correct.
D.
government market.
answer
...
question
The decision about what goods and services will be produced in a market economy is made by
Part 2
A.
lawmakers in the government voting on what will be produced.
B.
producers deciding what society wants most.
C.
consumers and firms choosing which goods and services to buy or produce.
D.
workers deciding to produce only what the boss says must be produced.
answer
C.
consumers and firms choosing which goods and services to buy or produce.
question
The law of demand​ implies, holding everything else​ constant, that as the price of bagels​ increases,
Part 2
A.
the quantity of bagels demanded will decrease.
B.
the quantity of bagels demanded will increase.
C.
the demand for bagels will decrease.
D.
the demand of bagels will increase.
answer
A.
the quantity of bagels demanded will decrease.
question
In a competitive market equilibrium
Part 2
A.
consumers and producers benefit equally.
B.
the marginal benefit equals the marginal cost of the last unit sold.
C.
marginal benefit and marginal cost are maximized.
D.
total consumer surplus equals total producer surplus.
answer
B.
the marginal benefit equals the marginal cost of the last unit sold.
question
The government proposes a tax on imported champagne. Buyers will bear the entire burden of the tax if the
Part 2
A.
demand curve is downward sloping and the supply curve is upward sloping.
Your answer is not correct.
B.
supply curve for imported champagne is vertical.
C.
demand curve for imported champagne is horizontal.
D.
demand curve for imported champagne is vertical.
answer
...
question
Assume that potatoes are an inferior good. Which of the following would cause both the equilibrium price and equilibrium quantity of potatoes to​ decrease?
Question content area bottom
Part 1
A.
a decrease in consumer income
B.
a technological advancement that results in a bumper crop of potatoes
C.
an increase in consumer income
Your answer is correct.
D.
a freeze that sharply reduces potato output
answer
...
question
Suppose that some teachers have decided that economic and financial uncertainty have made the prospect of retiring more​ risky, and therefore carry a higher cost than not retiring. By using all available information as they act to achieve their​ goals, these teachers are exemplifying the economic idea that
Part 2
A.
people are rational.
Your answer is correct.
B.
equity is more important than efficiency.
C.
optimal decisions are made at the margin.
D.
people respond to economic incentives.
answer
...
question
Ranchers can raise either cattle or sheep on their land. Which of the following would cause the supply of sheep to​ increase?
Question content area bottom
Part 1
A.
an increase in the price of sheep feed
B.
an increase in the price of sheep
Your answer is not correct.
C.
an increase in the demand for cattle
D.
a decrease in the price of cattle
answer
...
question
To affect the market outcome a price ceiling
Part 2
A.
must be set below the equilibrium price.
Your answer is correct.
B.
must be set below the legal price.
C.
must be set below the black market price.
D.
must be set below the price floor.
answer
...
question
The figure to the right represents the market for pecans. Assume that this is a competitive market. At a quantity of​ 12,000 pounds,
A.
producers should raise the price to​ $9 in order to sell the quantity demanded of​ 12,000.
B.
the marginal benefit of pecans is greater than the marginal​ cost; therefore, output is inefficiently high.
Your answer is not correct.
C.
the marginal benefit of pecans is greater than the marginal​ cost; therefore, output is inefficiently low.
D.
the marginal cost of pecans is greater than the marginal​ benefit; therefore, output is inefficiently high.
answer
...
question
the points outside the production possibilities frontier are
Part 2
A.
inefficient.
B.
attainable.
C.
unattainable.
Your answer is correct.
D.
efficient.
answer
...
question
Assume that California Merlot is a normal good. Prices of California Merlot have risen steadily in recent years. Over this same​ period, prices for French oak barrels used for wine storage have dropped and consumer incomes have risen. Which of the following best explains the rising prices of California​ Merlots?
Part 2
A.
The supply curve for Merlot has shifted to the right faster than the demand curve has shifted to the right.
B.
The supply curve for Merlot has shifted to the right while the demand curve for Merlot has shifted to the left.
C.
The demand curve and the supply curve for Merlot have both shifted to the left.
D.
The demand curve for Merlot has shifted to the right faster than the supply curve has shifted to the right.
answer
...
question
The slope of a production possibilities frontier
Part 2
A.
is always varying.
B.
is always constant.
C.
has no economic relevance or meaning.
D.
measures the opportunity cost of producing one more unit of a good.
answer
...
question
In a competitive​ market, the demand curve shows the​ _____________ received by consumers and the supply curve shows the​ _____________.
Part 2
A.
marginal​ benefit; marginal cost
Your answer is correct.
B.
economic​ surplus; opportunity cost
C.
net​ benefit; net cost
D.
​utility; average cost
answer
...
question
Suppose the demand curve for a product is horizontal and the supply curve is upward sloping. If a unit tax is imposed in the market for this​ product,
Part 2
A.
the tax burden will be shared by buyers and sellers.
B.
buyers bear the entire burden of the tax.
C.
the tax burden will be shared among the​ government, buyers, and sellers.
D.
sellers bear the entire burden of the tax.
answer
...
question
Making optimal decisions​ "at the​ margin" requires
Part 2
A.
making decisions according to​ one's whims and fancies.
B.
weighing the costs and benefits of a decision before deciding if it should be pursued.
Your answer is correct.
C.
making borderline decisions.
D.
making consistently irrational decisions.
answer
...
question
Which of the following will shift the demand curve for a​ good?
Part 2
A.
a change in the technology used to produce the good
B.
an increase in the price of the good
C.
a decrease in the price of the good
D.
a decrease in the price of a complementary good
answer
...
question
Trinh quits his ​$80,000−a−year job to become a full−time volunteer at a museum. What is the opportunity cost of his​ decision?
Question content area bottom
Part 1
A.
the value he attributes to the joy of working at a museum
B.
0 since he will no longer be earning a salary
C.
at least​ $80,000
Your answer is correct.
D.
depends on the​ "going rate" of museum employees
answer
...
question
Which of the following is a normative economic​ statement?
Question content area bottom
Part 1
A.
Farmers should not be allowed to grow and sell genetically−modified crops.
This is the correct answer.
B.
Rising corn prices have increased the price of corn−based ethanol.
C.
With rising home prices and falling mortgage interest​ rates, the amount of home foreclosures has decreased.
D.
The federal government is considering increasing regulations on the use of fossil fuels to promote the use of wind power.
answer
...
question
If the amount of athletic shoes purchased by millennials and members of generation Z increase as they choose to purchase these types of shoes compared to other types such as sandals and hiking​ boots, this will likely
Part 2
A.
increase the demand for athletic​ shoes, because athletic​ shoes, sandals, and hiking boots are considered complements.
B.
increase the demand for athletic​ shoes, because athletic​ shoes, sandals, and hiking boots are considered substitutes.
Your answer is correct.
C.
decrease the demand for athletic​ shoes, because athletic shoes are considered normal goods and sandals and hiking boots are considered inferior goods.
D.
decrease the demand for athletic​ shoes, because athletic shoes are considered inferior goods and sandals and hiking boots are considered normal goods.
answer
...
1 of 28
question
A grocery store sells a bag of potatoes at a fixed price of​ $2.30. Which of the following is a term used by economists to describe the money received from the sale of an additional bag of​ potatoes?
A. marginal revenue
B. gross earnings
C. pure profit
D. marginal costs
answer
A. marginal revenue
question
If the price of grapefruit​ rises, the substitution effect due to the price change will cause

A. a decrease in the demand for​ oranges, a substitute for grapefruit.
B. a decrease in the quantity of grapefruit supplied.
C. a decrease in the quantity of grapefruit demanded.
D. a decrease in the demand for grapefruit.
answer
C. a decrease in the quantity of grapefruit demanded.
question
A demand curve shows
A. the relationship between the price of a product and the total benefit consumers receive from the product.
B. the willingness of consumers to buy a product at different prices.
C. the relationship between the price of a product and the demand for the product.
D. the willingness of consumers to substitute one product for another product.
answer
B. the willingness of consumers to buy a product at different prices.
question
What is the difference between an​ 'increase in​ supply' and an​ 'increase in quantity​ supplied'?

A. An​ "increase in​ supply" means the supply curve has shifted to the right while an​ "increase in quantity​ supplied" refers to a movement along a given supply curve in response to an increase in price.
B. There is no difference between the two​ terms; they both refer to a shift of the supply curve.
C. An​ "increase in​ supply" means the supply curve has shifted to the right while an​ "increase in quantity​ supplied" means at any given price supply has increased.
D. There is no difference between the two​ terms; they both refer to a movement along a given supply curve.
answer
A. An​ "increase in​ supply" means the supply curve has shifted to the right while an​ "increase in quantity​ supplied" refers to a movement along a given supply curve in response to an increase in price.
question
In​ 2004, hurricanes destroyed a large portion of​ Florida's orange and grapefruit crops. In the market for citrus​ fruit,
Part 2
A.
the supply curve shifted to the left resulting in an increase in the equilibrium price.

B.
the demand curve shifted to the left resulting in a decrease in the equilibrium price.
C.
the supply curve shifted to the right resulting in an increase in the equilibrium price.
D.
the demand curve shifted to the right resulting in an increase in the equilibrium price.
answer
A. the supply curve shifted to the left resulting in an increase in the equilibrium price.
question
20) In 2010, Hooverville consumed 205,000 tons of sugar. In 2011, sugar consumption rose to 245,000 tons. Which is the correct formula for the percentage change in sugar consumption?
A) [(205,000-245,000)/245,000] x 100
B) [(245,000-205,000)/245,000] x 100
C) [(245,000-205,000)/205,000] x 100
D) [(245,000-205,000)/(205,000+245,000)] x 100
answer
C
question
In​ February, market analysts predict that the price of titanium will rise in March. What happens in the titanium market in​ February, holding everything else​ constant?
Part 2
A.
The quantity of titanium demanded and the quantity of titanium supplied both increase.
B.
The supply curve shifts to the left.
C.
The supply curve shifts to the right.
D.
The demand curve shifts to the left.
answer
B.
The supply curve shifts to the left.
question
In a production possibilities​ frontier, a point​ ________ the frontier is productively inefficient.
Part 2
A.
at either intercept of
B.
inside
C.
on
D.
outside
answer
B.
inside
question
The natural resources used in production are made available in the
Part 2
A.
goods and services market.
B.
product market.
C.
factor market.
Your answer is correct.
D.
government market.
answer
...
question
The decision about what goods and services will be produced in a market economy is made by
Part 2
A.
lawmakers in the government voting on what will be produced.
B.
producers deciding what society wants most.
C.
consumers and firms choosing which goods and services to buy or produce.
D.
workers deciding to produce only what the boss says must be produced.
answer
C.
consumers and firms choosing which goods and services to buy or produce.
question
The law of demand​ implies, holding everything else​ constant, that as the price of bagels​ increases,
Part 2
A.
the quantity of bagels demanded will decrease.
B.
the quantity of bagels demanded will increase.
C.
the demand for bagels will decrease.
D.
the demand of bagels will increase.
answer
A.
the quantity of bagels demanded will decrease.
question
In a competitive market equilibrium
Part 2
A.
consumers and producers benefit equally.
B.
the marginal benefit equals the marginal cost of the last unit sold.
C.
marginal benefit and marginal cost are maximized.
D.
total consumer surplus equals total producer surplus.
answer
B.
the marginal benefit equals the marginal cost of the last unit sold.
question
The government proposes a tax on imported champagne. Buyers will bear the entire burden of the tax if the
Part 2
A.
demand curve is downward sloping and the supply curve is upward sloping.
Your answer is not correct.
B.
supply curve for imported champagne is vertical.
C.
demand curve for imported champagne is horizontal.
D.
demand curve for imported champagne is vertical.
answer
...
question
Assume that potatoes are an inferior good. Which of the following would cause both the equilibrium price and equilibrium quantity of potatoes to​ decrease?
Question content area bottom
Part 1
A.
a decrease in consumer income
B.
a technological advancement that results in a bumper crop of potatoes
C.
an increase in consumer income
Your answer is correct.
D.
a freeze that sharply reduces potato output
answer
...
question
Suppose that some teachers have decided that economic and financial uncertainty have made the prospect of retiring more​ risky, and therefore carry a higher cost than not retiring. By using all available information as they act to achieve their​ goals, these teachers are exemplifying the economic idea that
Part 2
A.
people are rational.
Your answer is correct.
B.
equity is more important than efficiency.
C.
optimal decisions are made at the margin.
D.
people respond to economic incentives.
answer
...
question
Ranchers can raise either cattle or sheep on their land. Which of the following would cause the supply of sheep to​ increase?
Question content area bottom
Part 1
A.
an increase in the price of sheep feed
B.
an increase in the price of sheep
Your answer is not correct.
C.
an increase in the demand for cattle
D.
a decrease in the price of cattle
answer
...
question
To affect the market outcome a price ceiling
Part 2
A.
must be set below the equilibrium price.
Your answer is correct.
B.
must be set below the legal price.
C.
must be set below the black market price.
D.
must be set below the price floor.
answer
...
question
The figure to the right represents the market for pecans. Assume that this is a competitive market. At a quantity of​ 12,000 pounds,
A.
producers should raise the price to​ $9 in order to sell the quantity demanded of​ 12,000.
B.
the marginal benefit of pecans is greater than the marginal​ cost; therefore, output is inefficiently high.
Your answer is not correct.
C.
the marginal benefit of pecans is greater than the marginal​ cost; therefore, output is inefficiently low.
D.
the marginal cost of pecans is greater than the marginal​ benefit; therefore, output is inefficiently high.
answer
...
question
the points outside the production possibilities frontier are
Part 2
A.
inefficient.
B.
attainable.
C.
unattainable.
Your answer is correct.
D.
efficient.
answer
...
question
Assume that California Merlot is a normal good. Prices of California Merlot have risen steadily in recent years. Over this same​ period, prices for French oak barrels used for wine storage have dropped and consumer incomes have risen. Which of the following best explains the rising prices of California​ Merlots?
Part 2
A.
The supply curve for Merlot has shifted to the right faster than the demand curve has shifted to the right.
B.
The supply curve for Merlot has shifted to the right while the demand curve for Merlot has shifted to the left.
C.
The demand curve and the supply curve for Merlot have both shifted to the left.
D.
The demand curve for Merlot has shifted to the right faster than the supply curve has shifted to the right.
answer
...
question
The slope of a production possibilities frontier
Part 2
A.
is always varying.
B.
is always constant.
C.
has no economic relevance or meaning.
D.
measures the opportunity cost of producing one more unit of a good.
answer
...
question
In a competitive​ market, the demand curve shows the​ _____________ received by consumers and the supply curve shows the​ _____________.
Part 2
A.
marginal​ benefit; marginal cost
Your answer is correct.
B.
economic​ surplus; opportunity cost
C.
net​ benefit; net cost
D.
​utility; average cost
answer
...
question
Suppose the demand curve for a product is horizontal and the supply curve is upward sloping. If a unit tax is imposed in the market for this​ product,
Part 2
A.
the tax burden will be shared by buyers and sellers.
B.
buyers bear the entire burden of the tax.
C.
the tax burden will be shared among the​ government, buyers, and sellers.
D.
sellers bear the entire burden of the tax.
answer
...
question
Making optimal decisions​ "at the​ margin" requires
Part 2
A.
making decisions according to​ one's whims and fancies.
B.
weighing the costs and benefits of a decision before deciding if it should be pursued.
Your answer is correct.
C.
making borderline decisions.
D.
making consistently irrational decisions.
answer
...
question
Which of the following will shift the demand curve for a​ good?
Part 2
A.
a change in the technology used to produce the good
B.
an increase in the price of the good
C.
a decrease in the price of the good
D.
a decrease in the price of a complementary good
answer
...
question
Trinh quits his ​$80,000−a−year job to become a full−time volunteer at a museum. What is the opportunity cost of his​ decision?
Question content area bottom
Part 1
A.
the value he attributes to the joy of working at a museum
B.
0 since he will no longer be earning a salary
C.
at least​ $80,000
Your answer is correct.
D.
depends on the​ "going rate" of museum employees
answer
...
question
Which of the following is a normative economic​ statement?
Question content area bottom
Part 1
A.
Farmers should not be allowed to grow and sell genetically−modified crops.
This is the correct answer.
B.
Rising corn prices have increased the price of corn−based ethanol.
C.
With rising home prices and falling mortgage interest​ rates, the amount of home foreclosures has decreased.
D.
The federal government is considering increasing regulations on the use of fossil fuels to promote the use of wind power.
answer
...
question
If the amount of athletic shoes purchased by millennials and members of generation Z increase as they choose to purchase these types of shoes compared to other types such as sandals and hiking​ boots, this will likely
Part 2
A.
increase the demand for athletic​ shoes, because athletic​ shoes, sandals, and hiking boots are considered complements.
B.
increase the demand for athletic​ shoes, because athletic​ shoes, sandals, and hiking boots are considered substitutes.
Your answer is correct.
C.
decrease the demand for athletic​ shoes, because athletic shoes are considered normal goods and sandals and hiking boots are considered inferior goods.
D.
decrease the demand for athletic​ shoes, because athletic shoes are considered inferior goods and sandals and hiking boots are considered normal goods.
answer
...
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