Download Exam I Fall 2008 with answers

Exam I
ECON 2106
FALL 2008
NAME(PRINT):___________________
1)
Assume that the price of X decreases and as a result of that the demand for Y
increases while the demand for Z decreases. From this we can conclude that
a)
goods X and Y are substitutes in consumption
b)
goods X and Z are substitutes in consumption
c)
goods Y and Z are complements in consumption
d)
none of the above
2)
Which of the following best describes a normal good?
a)
a reduction in the consumer’s income will lead to a decline in the
demand
b)
a reduction in the price of the product leads to a decrease in the level of
quantity demanded
c)
an increase in the consumer’s income causes a decrease in the demand
d)
a reduction in the consumer’s income causes an increase in the demand
e)
none of the above
3)
If we assume the following scenario: as the average income of the consumer
increases the demand for “fast” food decreases, then we can assume that “fast” food
is
a)
a normal good
b)
an inferior good
c)
none of the above
4)
Which of the following will likely make the demand relatively less elastic (less price
sensitive)
a)
presence of close substitutes in consumption
b)
lack of close substitutes in consumption
c)
lack of complements in consumption
d)
none of the above
5)
Which of the following best defines modern economics?
a)
a social science that studies allocation of resources
b)
a natural science that studies human behavior
c)
a business discipline that studies financial markets
d)
none of the above
6)
Economics is primarily concerned with
a)
Efficiency
b)
Financial gains
c)
Functions of government
d)
None of the above
7)
During the last decade and a half we witnessed commercial adaptation of the internet.
This process has affected most businesses in one way or another. The process of
commercial adaptation of the internet has likely
a)
Expanded the geographical boundaries of the market
b)
Reduced the competitive pressure felt by the various firms
c)
Left most retail markets completely unaffected
d)
None of the above
8)
Assume that you have a US 5 dollar gold coin that you purchased in 1999 for 35
dollars. Today, the market value of this coin is 75 dollars. What is the economic cost
of continuing the ownership of the coin?
a)
35 USD
b)
40 USD
c)
75 USD
d)
110 USD
e)
0 USD
9)
We should expect my demand for gasoline at a local BP gas station to be ______
than my demand for gasoline as a whole.
a)
more elastic
b)
less elastic
c)
same in terms of elasticity
10)
Two goods can be considered to be in the same market if
a)
the consumer considers them as complements in consumption
b)
the consumer considers them as close substitutes in consumption
c)
they are not related in the consumption decision
d)
none of the above
11)
Which of the following statements is incorrect?
a)
in a recession, normal goods manufacturers are expected to experience
reductions in the demand
b)
in a recession, inferior goods manufacturers are not expected to see
reductions in the demand
c)
all producers are going to be negatively effected in a recession
d)
none of the above
12)
In which scenario both, the equilibrium price and quantity will increase at the same
time?
a)
If the supply increases
b)
If both, the supply and demand increase
c)
If the demand increases
d)
If both, the supply and the demand decrease
e)
None of the above
13)
If the supply increases while the demand decreases,
a)
the equilibrium price will definitely increase
b)
the equilibrium quantity will definitely increase
c)
the equilibrium price will definitely decrease
d)
the equilibrium quantity will definitely decrease
14)
If we assume that the current equilibrium wage for low skilled labor is 8 dollars per
hour and the minimum wage is increased to 7.25 per hour then
a)
the unemployment amongst the low-skilled labor will increase
b)
the unemployment amongst the low-skilled labor will remain unaffected
c)
the unemployment amongst the low-skilled labor will decrease
d)
none of the above
15)
What would your answer to the previous question be if the current market clearing
wage equaled 7.00?
a)
the unemployment would increase
b)
the unemployment would remain the same
c)
the unemployment would decrease
d)
none of the above
16)
Which of the following statements best describes most modern economies?
a)
most modern economies use a mixed economic system, where elements of
socialism are intermixed with capitalism
b)
most modern economies use a pure capitalist model
c)
most modern economies use a pure socialistic model
d)
none of the above
17)
The cost of taking this class is
a)
the tuition cost
b)
the cost of the textbook and other materials needed for the class plus the cost
of the tuition
c)
part b plus the value of your time allocated to this class
d)
none of the above
18)
Microeconomics is best defined as
a)
the branch of economics that studies the economy as a whole
b)
the branch of economics that studies the behavior of individual economic
entities, such as firms, consumers…
c)
all of the above
d)
none of the above
19)
Consider the following scenario, a gas station offers a 2 % discount on the price of
gasoline for the next hour, and as a result of that discount (in other words, all else is
held constant), the quantity of gasoline sold increased by 4%. What is the elasticity of
demand in absolute value?
a)
2
b)
4
c)
0.5
d)
none of the above
20)
Consider the setup from the previous question (question 19). Does the gas station
operate in the
a)
Elastic range of the demand
b)
Inelastic range of the demand
c)
At the unit elastic point on the demand
d)
None of the above
21)
Again, consider the setup from question 19. Did the discount result in
a)
A rise in the revenues
b)
A decline in the revenues
c)
Left the revenues unchanged
22)
Which of the following is not a characteristic of the market equilibrium in a free
market economy?
a)
the equilibrium is stable
b)
if something changes in the market that affects either the consumer or the
producer behavior, the market will on its own adjust to a new equilibrium
c)
the market equilibrium results in no shortage nor surplus of the output.
d)
None of the above
23)
If the price of a product that is a substitute in PRODUTION to good X increases then
a)
the price of X is also likely to increase, all else held constant
b)
the quantity of X supplied is likely to increase, all else held constant
c)
the price of X is likely to decrease, all else held constant
d)
none of the above
24)
The demand for gasoline tends to have very low price sensitivity. If the costs of
refining oil and the price of oil increase then we should expect?
a)
a sharp increase in the equilibrium price of gasoline
b)
a sharp decrease in the equilibrium quantity of gasoline traded
c)
a decrease in the equilibrium price of gasoline
d)
a decrease in the equilibrium quantity of gasoline traded
e)
none of the above
Assume the following scenario: we are selling a product, call it X, and we observe how our sales
are affected by the prices of several other products (Y, W, and Z), all else held constant. Each
time the producers of Y increase the price, our sales suffer substantial losses, while each time the
producers of W increase their price, we observe moderate increases in sales. For some reason, the
changes in the price of Z have no effect on our sales. From this we can conclude the following:
25)
Goods X and Y are
a)
substitutes in consumption
b)
complements in consumption
c)
not related in consumption
d)
not enough information is provided
26)
Goods X and W are
a)
substitutes in consumption
b)
complements in consumption
c)
not related in consumption
d)
not enough information is provided
27)
Goods X and Z
a)
substitutes in consumption
b)
complements in consumption
c)
not related in consumption
d)
not enough information is provided
28)
If we have a growing expectation in the real estate market that the property values in
the city of Atlanta will continue to fall in the future then we should observe
a)
an increase in the prices now because the demand will increase
b)
a decrease in the prices now because the demand will decrease
c)
an increase in the price now because the demand will decrease
d)
a decrease in the price now because the demand will increase
29)
The law of demand states that
a)
as the price increases the quantity demanded decreases
b)
as the price increases the quantity demanded increases
c)
there is no such thing as the law of demand
d)
as the price increases the demand decreases
30)
Assume that every student in our class pays the same tuition and the same price for
the textbook. Also assume that those are the ONLY explicit costs of the class. Also
note that students in our class differ in terms of age, occupation, work experience….
Based on this information we can conclude that
a)
everyone in this class faces the same accounting and economic costs
b)
everyone in this class faces the same accounting but not necessarily
economic costs
c)
everyone in this class faces the same economic but not necessarily
accounting costs
d)
none of the above
Thank you for taking the test!