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Exam I
ECON2106
SPRING 2007
NAME_____________
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)
an increase in the price of the product leads to a decrease in the level of
quantity demanded
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 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
5)
Economics is primarily concerned with
a)
Efficiency
b)
Financial gains
c)
Functions of government
d)
None of the above
6)
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
7)
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
8)
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
9)
Which of the following statements is incorrect?
a)
in a recession, normal goods manufacturers are expected to have a reduction
in the demand
b)
in a recession, inferior goods manufacturers are not expected to have
reductions in the demand
c)
all producers are going to be negatively effected in a recession
d)
none of the above
10)
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
11)
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
12)
If both, supply and demand increase at the same time,
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
13)
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
14)
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
15)
Macroeconomics 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
16)
In a market economy, resource allocation is determined through
a)
consumer demand
b)
government regulations
c)
competition
d)
none of the above
17)
One of the lessons of the Production Possibilities Frontier is that a complete
specialization in international trade is not likely to occur (at least in the short-run) in
part because of
a)
the fact that the opportunity cost remains constant no mater what the
combination of the output is
b)
the resources tend to specialize and hence an additional transfer of resources
from one sector to another may lead to higher opportunity cost on the
margin.
c)
None of the above
18)
Which of the following statements is incorrect?
a)
Implicit costs arise only when owner-provided inputs are present
b)
Implicit costs require an evaluation of the next best foregone alternative
c)
Economic costs include both explicit and implicit costs
d)
None of the above statements are correct
19)
Which of the following demand curves is consistent with the law of demand?
a)
upward slopped
b)
downward slopped
c)
vertical
d)
horizontal
20)
The principle of comparative advantage is based on the idea that a country specializes
in the production of the product in which it has the lowest ….
a)
absolute cost of production relative to all the other producers
b)
opportunity cost of production relative to all the other producers
c)
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:
21)
Goods X and Y are
a)
substitutes in consumption
b)
complements in consumption
c)
not related in consumption
d)
not enough information is provided
22)
Goods X and W are
a)
substitutes in consumption
b)
complements in consumption
c)
not related in consumption
d)
not enough information is provided
23)
Goods X and Z
a)
substitutes in consumption
b)
complements in consumption
c)
not related in consumption
d)
not enough information is provided
24)
If we have a growing expectation in the real estate market that the property values in
the city of Atlanta will rise in the future then we should observe
a)
an increase in the prices now
b)
a decrease in the prices now
c)
an increase in the level of sales
d)
a decrease in the level of sales
25)
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)
none of the above
26)
The law of supply states that
a)
as the price increases the quantity supplied decreases
b)
as the price increases the quantity supplied increases
c)
there is no such thing as the law of supply
d)
none of the above
27)
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
28)
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
29)
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
Which of the following is not a positive statement?
a)
Attendance in our class is always less than 100%
b)
Some students leave the class before it ends!
c)
Some students use candies to play games while the class is taking place
d)
Attendance in our class should be 100% every period, during the entire
period
30)