Download Fall `12 Test 1

Econ 2113 – Test 1A
Name________________________________
Dr. Rupp – Fall 2012
Pledge: “I have neither given or received aid on this exam”
Signature_____________________________________
True/False
Indicate whether the statement is true or false.
Figure 2-14
45
dishwashers
40
35
30
25
20
A
C
B
D
15
10
5
15
30
45
60
75
doghouses
____
1. Refer to Figure 2-14. If this economy uses all its resources in the dishwasher industry, it produces 35
dishwashers and no doghouses.
____
2. Refer to Figure 2-14. It is possible for this economy to produce 75 doghouses.
____
3. Refer to Figure 2-14. Given the technology available for manufacturing doghouses and dishwashers, this
economy does not have enough of the factors of production to support the level of output represented by point
C.
____
4. Refer to Figure 2-14. Points A, B, and D represent feasible outcomes for this economy.
____
5. Economists believe that production possibilities frontiers rarely have a bowed shape.
Multiple Choice
Identify the choice that best completes the statement or answers the question.
____
____
____
____
6. Suppose the government taxes the wealthy at a higher rate than it taxes the poor and then develops programs
to redistribute the tax revenue from the wealthy to the poor. This redistribution of wealth
a. is more efficient and more equal for society.
b. is more efficient but less equal for society.
c. is more equal but less efficient for society.
d. is less equal and less efficient for society.
7. What you give up to obtain an item is called your
a. opportunity cost.
b. explicit cost.
c. monetary cost.
d. direct cost.
8. When the France trades with Russia,
a. both countries are likely made better off.
b. only Russia benefits since France can produce all goods at a higher level of quality than
Russia.
c. only France benefits since Russia’s low wages guarantee profitable firms in Russia
regardless of trade.
d. neither country will benefit since France is more efficient than Russia at producing all
goods.
9. The invisible hand refers to
a. how central planners made economic decisions.
b. how the decisions of households and firms lead to desirable market outcomes.
c. the control that large firms have over the economy.
d. government regulations without which the economy would be less efficient.
Figure 2-11
capital
goods
A
B
consumer
goods
____ 10. Refer to Figure 2-11. The shift of the production possibilities frontier from A to B can best be described as
a. a downturn in the economy.
b. economic growth.
c. an enhancement of equality.
d. an improvement in the allocation of resources.
____ 11. Macroeconomics is the study of
a. individual decision makers.
b. international trade.
c. economy-wide phenomena.
d. markets for large products.
____ 12. Positive statements are
a. prescriptive.
b. claims about how the world should be.
c. claims about how the world is.
d. made by economists speaking as policy advisers.
____ 13. Which of the following is an example of a normative, as opposed to positive, statement?
a. Gasoline prices ought to be lower than they are now.
b. The federal government should raise taxes on wealthy people.
c. The social security system is a good system and it deserves to be preserved as it is.
d. All of the above are normative statements.
Table 3-12
Labor Hours Needed to
Make 1 Pound of:
Amount
Produced in 40 hours
Meat
Potatoes
Meat
Potatoes
Farmer
8 hours/pound
5 hours/pound
5 pounds
8 pounds
Rancher
4 hours/pound
10 hours/pound
10 pounds
4 pounds
____ 14. Refer to Table 3-12. For the rancher, the opportunity cost of 1 pound of meat is
a. 0.4 pound of potatoes.
b. 2.5 pounds of potatoes.
c. 4 pounds of potatoes.
d. 10 pounds of potatoes.
____ 15. Refer to Table 3-12. For the farmer, the opportunity cost of 1 pound of potatoes is
a. 0.625 pound of meat.
b. 1.0 pounds of meat.
c. 1.6 pounds of meat.
d. 3.2 pounds of meat.
____ 16. Refer to Table 3-12. Relative to the rancher, the farmer has a comparative advantage in the production of
a. meat, but not in the production of potatoes.
b. potatoes, but not in the production of meat.
c. both meat and potatoes.
d. neither meat nor potatoes.
Table 3-17
US and French Production Opportunities
Wine (in millions of gallons)
16
8
US
France
Cheese (in millions of lbs.)
32
4
____ 17. Refer to Table 3-17 The US has a comparative advantage in the production of
a. wine.
b. cheese.
c. both wine and cheese.
d. neither wine nor cheese.
____ 18. Refer to Table 3-17 France has an absolute advantage in the production of
a. wine.
b. cheese.
c. both wine and cheese.
d. neither wine nor cheese.
____ 19. Suppose the US and Mexico both produce semiconductors and auto parts and the US has a comparative
advantage in semiconductors while Mexico has a comparative advantage in auto parts. If the US exports
semiconductors to Mexico and imports auto parts from Mexico,
a. both countries, as a whole, will be better off.
b. all individuals in both countries will be better off.
c. both countries, as a whole, will be worse off.
d. all individuals in both countries will be worse off.
____ 20. When two countries trade with one another, it is most likely because
a. the wealthy people in each of the two countries are able to benefit, through trade, by
taking advantage of other people who are poor.
b. some people involved in the trade do not understand that one of the two countries will
become worse-off because of the trade.
c. the opportunity costs of producing various goods are identical for the two countries.
d. the two countries wish to take advantage of the principle of comparative advantage.
Table 3-5
Assume that England and Spain can switch between producing cheese and producing bread at a constant rate.
Labor Hours Needed
to Make 1 Unit of
Cheese
Bread
1
4
4
8
England
Spain
Number of Units
Produced in 40 Hours
Cheese
Bread
40
10
10
5
____ 21. Refer to Table 3-5. England should export
a. cheese and import bread.
b. bread and import cheese.
c. both goods and import neither good.
d. neither good and import both goods.
Figure 3-8
Chile’s Production Possibilities Frontier
20
soybeans
Colombia’s Production Possibilities Frontier
20
( in pounds)
18
18
16
16
14
14
12
12
10
10
8
8
6
6
4
4
2
2
2
4
6
8
10
12
14
16
18
20
coffee
( in pounds)
soybeans
( in pounds)
2
4
6
8
____ 22. Refer to Figure 3-8. Chile should specialize in the production of
a. coffee and import soybeans.
b. soybeans and import coffee.
c. both goods and import neither good.
d. neither good and import both goods.
10
12
14
16
18
20
coffee
( in pounds)
____ 23. A decrease in the price of a good will
a. increase demand.
b. decrease demand.
c. increase quantity demanded.
d. decrease quantity demanded.
____ 24. Which of these statements best represents the law of demand?
a. When buyers’ tastes for a good increase, they purchase more of the good.
b. When income levels increase, buyers purchase more of most goods.
c. When the price of a good decreases, buyers purchase more of the good.
d. When buyers’ demands for a good increase, the price of the good increases.
____ 25. The demand curve for a good is a line that relates
a. price and quantity demanded.
b. income and quantity demanded.
c. quantity demanded and quantity supplied.
d. price and income.
Figure 4-2
20
Price
20
Consumer A
18
Price
Consumer B
18
16
16
14
14
12
12
10
10
8
8
6
6
4
4
2
2
D1
2
4
6
8
10
D2
12
14
16
Quantity
2
4
6
8
10
12
14
16
Quantity
____ 26. Refer to Figure 4-2. If Consumer A and Consumer B are the only consumers in the market, then the market
quantity demanded when the price is $6 is
a. 4 units.
b. 6 units.
c. 8 units.
d. 12 units.
Table 4-2
Price
William’s
Quantity
Demanded
$12
2
$10
4
$8
6
$6
8
$4
10
$2
12
Fergie’s
Quantity
Demanded
1
4
7
8
9
10
Taboo’s
Quantity
Demanded
3
4
5
4
3
2
apl.de.ap’s
Quantity
Demanded
4
5
6
7
8
9
____ 27. Refer to Table 4-2. If these are the only four buyers in the market, then the market quantity demanded at a
price of $8 is
a. 4 units.
b. 6 units.
c. 24 units.
d. 32 units.
Figure 4-4
Price
Demand A
Demand B
Demand C
Quantity
____ 28. Refer to Figure 4-4. Which of the following would cause the demand curve to shift from Demand C to
Demand A in the market for DVDs?
a. an increase in the price of DVDs
b. a decrease in the price of DVD players
c. a change in consumer preferences toward watching movies in movie theaters rather than at
home
d. an expectation by buyers that their incomes will increase in the very near future
____ 29. Refer to Figure 4-4. Which of the following would cause the demand curve to shift from Demand A to
Demand B in the market for oranges in the United States?
a. a freeze in Florida
b. a technological advance that allows oranges to ripen faster
c. a decrease in the price of apples
d. an announcement by the FDA that oranges prevent heart disease
____ 30. Each of the following is a determinant of demand except
a. tastes.
b. production technology.
c. expectations.
d. the prices of related goods.
____ 31. You lose your job and, as a result, you buy fewer iTunes music downloads. This shows that you consider
iTunes music downloads to be a(n)
a. luxury good.
b. inferior good.
c. normal good.
d. complementary good.
____ 32. Soup is an inferior good if the demand
a. for soup falls when the price of a substitute for soup rises.
b. for soup rises when the price of soup falls.
c. curve for soup slopes upward.
d. for soup falls when income rises.
____ 33. A likely example of substitute goods for most people would be
a. peanut butter and jelly.
b. tennis balls and tennis rackets.
c. televisions and subscriptions to cable television services.
d. pencils and pens.
____ 34. You wear either shorts or sweatpants every day. You notice that sweatpants have gone on sale, so your
demand for
a. sweatpants will increase.
b. sweatpants will decrease.
c. shorts will increase.
d. shorts will decrease.
____ 35. Two goods are complements when a decrease in the price of one good
a. decreases the quantity demanded of the other good.
b. decreases the demand for the other good.
c. increases the quantity demanded of the other good.
d. increases the demand for the other good.
____ 36. A likely example of complementary goods for most people would be
a. butter and margarine.
b. lawnmowers and automobiles.
c. chips and salsa.
d. cola and lemonade.
Figure 4-8
10
Price
9
Supply
8
7
6
5
A
4
3
2
B
1
1
2
3
4
5
6
7
8
Quantity
____ 37. Refer to Figure 4-8. The movement from Point A to Point B represents a(n)
a. shift in the supply curve.
b. decrease in the quantity supplied.
c. increase in the quantity supplied.
d. Both a) and b) are correct.
____ 38. A supply curve slopes upward because
a. as more is produced, total cost of production falls.
b. an increase in input prices increases supply.
c. the quantity supplied of most goods and services increases over time.
d. an increase in price gives producers an incentive to supply a larger quantity.
Figure 4-10
Price
Supply A
Supply B
Supply C
Quantity
____ 39. Refer to Figure 4-10. Which of the following would cause the supply curve to shift from Supply A to
Supply C in the market for winter coats?
a. an increase in the price of winter coats
b. a decrease in the number of firms selling winter coats
c. a decrease in the price of zippers and snaps
d. a decrease in the price of winter hats and gloves
____ 40. Refer to Figure 4-10. Which of the following would cause the supply curve to shift from Supply B to
Supply A in the market for disposable ballpoint pens?
a. a decrease in the price of disposable ballpoint pens
b. an increase in the price of fountain pens
c. an increase in the price of ink
d. an improvement in technology that allows firms to use less labor in the production of
disposable ballpoint pens
____ 41. A decrease in supply is represented by a
a. movement downward and to the left along a supply curve.
b. movement upward and to the right along a supply curve.
c. rightward shift of a supply curve.
d. leftward shift of a supply curve.
____ 42. Matthew bakes apple pies that he sells at the local farmer’s market. If the price of apples increases, the
a. supply curve for Matthew’s pies will increase.
b. supply curve for Matthew’s pies will decrease.
c. demand curve for Matthew’s pies will increase.
d. demand curve for Matthew’s pies will decrease.
____ 43. A improvement in production technology will shift the
a. supply curve to the right.
b. supply curve to the left.
c. demand curve to the right.
d. demand curve to the left.
____ 44. At the equilibrium price, the quantity of the good that buyers are willing and able to buy
a. is greater than the quantity that sellers are willing and able to sell.
b. exactly equals the quantity that sellers are willing and able to sell.
c. is less than the quantity that sellers are willing and able to sell.
d. Either a) or c) could be correct.
____ 45. If the supply of a product decreases, then we would expect equilibrium price
a. to increase and equilibrium quantity to decrease.
b. to decrease and equilibrium quantity to increase.
c. and equilibrium quantity to both increase.
d. and equilibrium quantity to both decrease.
____ 46. If, at the current price, there is a surplus of a good, then
a. sellers are producing more than buyers wish to buy.
b. the market must be in equilibrium.
c. the price is below the equilibrium price.
d. quantity demanded equals quantity supplied.
Table 4-7
Price
Quantity
Quantity
Demanded
Supplied
$10
10
60
$8
20
45
$6
30
30
$4
40
15
$2
50
0
____ 47. Refer to Table 4-7. The equilibrium price and quantity, respectively, are
a. $2 and 50 units.
b. $6 and 30 units.
c. $6 and 60 units.
d. $12 and 30 units.
Figure 4-15
50
45
price
S
40
35
30
25
20
15
10
5
D
100 200 300 400 500 600 700 800
quantity
____ 48. Refer to Figure 4-15. At a price of $15, there would be a
a. surplus of 400 units.
b. shortage of 200 units.
c. shortage of 400 units.
d. shortage of 600 units.
____ 49. An early frost in the vineyards of Napa Valley would cause a(n)
a. increase in the demand for wine, increasing price.
b. increase in the supply of wine, decreasing price.
c. decrease in the demand for wine, decreasing price.
d. decrease in the supply of wine, increasing price.
____ 50. Which of the following events would cause the price of oranges to fall?
a. There is a shortage of oranges.
b. The FDA announces that bananas cause strokes, and oranges and bananas are substitutes.
c. The price of land throughout Florida decreases, and Florida produces a significant
proportion of the nation’s oranges.
d. All of the above are correct.
Extra Credit Question:
To be eligible to answer this extra credit question, you must satisfy both criteria below:
•
Your cell phone has not rung in class
•
You are taking this test in class at the regularly scheduled time: (Tuesday, September 11)
____ 51. If consumers often purchase muffins to eat while they drink their lattés at local coffee shops, what would
happen to the equilibrium price and quantity of lattés if the price of muffins falls?
a. Both the equilibrium price and quantity would increase.
b. Both the equilibrium price and quantity would decrease.
c. The equilibrium price would increase, and the equilibrium quantity would decrease.
d. The equilibrium price would decrease, and the equilibrium quantity would increase.
Econ 2113 – Test 1A
Dr. Rupp – Fall 2012
TRUE/FALSE
1. ANS:
NAT:
TOP:
2. ANS:
NAT:
TOP:
3. ANS:
NAT:
TOP:
4. ANS:
NAT:
TOP:
5. ANS:
NAT:
TOP:
T
PTS: 1
DIF: 2
REF: 2-1
Analytic
LOC: Understanding and applying economic models
Production possibilities frontier
MSC: Applicative
F
PTS: 1
DIF: 2
REF: 2-1
Analytic
LOC: Understanding and applying economic models
Production possibilities frontier
MSC: Applicative
T
PTS: 1
DIF: 2
REF: 2-1
Analytic
LOC: Understanding and applying economic models
Production possibilities frontier
MSC: Applicative
T
PTS: 1
DIF: 2
REF: 2-1
Analytic
LOC: Understanding and applying economic models
Production possibilities frontier
MSC: Applicative
F
PTS: 1
DIF: 1
REF: 2-1
Analytic
LOC: The study of economics and definitions in economics
Economists | Production possibilities frontier
MSC: Definitional
MULTIPLE CHOICE
6. ANS:
NAT:
MSC:
7. ANS:
NAT:
TOP:
8. ANS:
NAT:
TOP:
9. ANS:
NAT:
TOP:
10. ANS:
NAT:
TOP:
11. ANS:
NAT:
TOP:
12. ANS:
NAT:
TOP:
13. ANS:
NAT:
TOP:
14. ANS:
NAT:
TOP:
15. ANS:
NAT:
TOP:
16. ANS:
NAT:
TOP:
17. ANS:
NAT:
TOP:
18. ANS:
NAT:
TOP:
19. ANS:
NAT:
TOP:
20. ANS:
NAT:
TOP:
21. ANS:
C
PTS: 1
DIF: 2
REF: 1-1
Analytic
LOC: Efficiency and equity
TOP: Efficiency | Equality
Interpretive
A
PTS: 1
DIF: 1
REF: 1-1
Analytic
LOC: Scarcity, tradeoffs, and opportunity cost
Opportunity cost
MSC: Definitional
A
PTS: 1
DIF: 2
REF: 1-2
Analytic
LOC: Gains from trade, specialization and trade
Gains from trade
MSC: Applicative
B
PTS: 1
DIF: 1
REF: 1-2
Analytic
LOC: Markets, market failure, and externalities
Invisible hand
MSC: Definitional
B
PTS: 1
DIF: 2
REF: 2-1
Analytic
LOC: Understanding and applying economic models
Production possibilities frontier | Economic growth
MSC: Applicative
C
PTS: 1
DIF: 1
REF: 2-1
Analytic
LOC: The study of economics and definitions in economics
Microeconomics | Macroeconomics
MSC: Definitional
C
PTS: 1
DIF: 1
REF: 2-2
Analytic
LOC: The study of economics and definitions in economics
Positive statements
MSC: Definitional
D
PTS: 1
DIF: 2
REF: 2-2
Analytic
LOC: The study of economics and definitions in economics
Normative statements
MSC: Applicative
A
PTS: 1
DIF: 2
REF: 3-2
Analytic
LOC: Scarcity, tradeoffs, and opportunity cost
Opportunity cost
MSC: Applicative
A
PTS: 1
DIF: 2
REF: 3-2
Analytic
LOC: Scarcity, tradeoffs, and opportunity cost
Opportunity cost
MSC: Applicative
B
PTS: 1
DIF: 2
REF: 3-2
Analytic
LOC: Gains from trade, specialization and trade
Comparative advantage
MSC: Applicative
B
PTS: 1
DIF: 2
REF: 3-2
Analytic
LOC: Gains from trade, specialization and trade
Comparative advantage
MSC: Applicative
D
PTS: 1
DIF: 2
REF: 3-2
Analytic
LOC: Gains from trade, specialization and trade
Comparative advantage
MSC: Applicative
A
PTS: 1
DIF: 1
REF: 3-3
Analytic
LOC: Gains from trade, specialization and trade
Gains from trade
MSC: Applicative
D
PTS: 1
DIF: 2
REF: 3-3
Analytic
LOC: Gains from trade, specialization and trade
Comparative advantage | Trade
MSC: Interpretive
A
PTS: 1
DIF: 2
REF: 3-3
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
NAT:
TOP:
ANS:
NAT:
TOP:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
ANS:
NAT:
MSC:
Analytic
LOC: Gains from trade, specialization and trade
Exports | Imports
MSC: Applicative
B
PTS: 1
DIF: 2
REF:
Analytic
LOC: Gains from trade, specialization and trade
Specialization | Imports
MSC: Applicative
C
PTS: 1
DIF: 2
REF:
Analytic
LOC: Supply and demand
TOP:
Interpretive
C
PTS: 1
DIF: 2
REF:
Analytic
LOC: Supply and demand
TOP:
Interpretive
A
PTS: 1
DIF: 1
REF:
Analytic
LOC: Supply and demand
TOP:
Definitional
D
PTS: 1
DIF: 2
REF:
Analytic
LOC: Supply and demand
TOP:
Applicative
C
PTS: 1
DIF: 2
REF:
Analytic
LOC: Supply and demand
TOP:
Applicative
C
PTS: 1
DIF: 2
REF:
Analytic
LOC: Supply and demand
TOP:
Applicative
D
PTS: 1
DIF: 2
REF:
Analytic
LOC: Supply and demand
TOP:
Applicative
B
PTS: 1
DIF: 2
REF:
Analytic
LOC: Supply and demand
TOP:
Interpretive
C
PTS: 1
DIF: 2
REF:
Analytic
LOC: Supply and demand
TOP:
Applicative
D
PTS: 1
DIF: 2
REF:
Analytic
LOC: Supply and demand
TOP:
Applicative
D
PTS: 1
DIF: 2
REF:
Analytic
LOC: Supply and demand
TOP:
Applicative
D
PTS: 1
DIF: 2
REF:
Analytic
LOC: Supply and demand
TOP:
Applicative
D
PTS: 1
DIF: 1
REF:
Analytic
LOC: Supply and demand
TOP:
Definitional
C
PTS: 1
DIF: 2
REF:
Analytic
LOC: Supply and demand
TOP:
Applicative
B
PTS: 1
DIF: 1
REF:
Analytic
LOC: Supply and demand
TOP:
Definitional
D
PTS: 1
DIF: 2
REF:
Analytic
LOC: Supply and demand
TOP:
Interpretive
C
PTS: 1
DIF: 2
REF:
Analytic
LOC: Supply and demand
TOP:
Applicative
C
PTS: 1
DIF: 2
REF:
Analytic
LOC: Supply and demand
TOP:
Applicative
D
PTS: 1
DIF: 2
REF:
Analytic
LOC: Supply and demand
TOP:
Interpretive
B
PTS: 1
DIF: 2
REF:
Analytic
LOC: Supply and demand
TOP:
Applicative
A
PTS: 1
DIF: 2
REF:
Analytic
LOC: Supply and demand
TOP:
Interpretive
B
PTS: 1
DIF: 1
REF:
Analytic
LOC: Supply and demand
TOP:
Definitional
3-3
4-2
Quantity demanded
4-2
Law of demand
4-2
Demand curve
4-2
Market demand
4-2
Market demand
4-2
Demand curve
4-2
Demand curve
4-2
Determinants of demand
4-2
Normal goods
4-2
Inferior goods
4-2
Substitutes
4-2
Substitutes
4-2
Complements
4-2
Complements
4-3
Quantity supplied
4-3
Law of supply
4-3
Supply curve
4-3
Supply curve
4-3
Supply curve
4-3
Input prices
4-3
Technology
4-4
Equilibrium
45. ANS:
NAT:
MSC:
46. ANS:
NAT:
MSC:
47. ANS:
NAT:
MSC:
48. ANS:
NAT:
MSC:
49. ANS:
NAT:
MSC:
50. ANS:
NAT:
MSC:
51. ANS:
NAT:
MSC:
A
Analytic
Interpretive
A
Analytic
Interpretive
B
Analytic
Applicative
C
Analytic
Applicative
D
Analytic
Applicative
C
Analytic
Applicative
A
Analytic
Analytical
PTS: 1
DIF: 2
LOC: Supply and demand
REF: 4-4
TOP: Equilibrium
PTS: 1
DIF: 2
LOC: Supply and demand
REF: 4-4
TOP: Surpluses
PTS: 1
DIF: 2
LOC: Supply and demand
REF: 4-4
TOP: Equilibrium
PTS: 1
DIF: 2
LOC: Supply and demand
REF: 4-4
TOP: Shortages
PTS: 1
DIF: 2
LOC: Supply and demand
REF: 4-4
TOP: Equilibrium | Input prices
PTS: 1
DIF: 2
LOC: Supply and demand
REF: 4-4
TOP: Equilibrium | Input prices
PTS: 1
DIF: 2
LOC: Supply and demand
REF: 4-4
TOP: Equilibrium | Complements